RBI Sold ~$7 Billion to Defend Rupee on July 24
UPSC / SSC current affairs note · Economy
Why in news
The RBI intervened heavily in forex markets on July 24, selling about $7 billion to prevent the rupee from breaching its record low. This large-scale intervention highlights the central bank's active role in managing currency volatility amid global pressures.
Background
The Indian rupee has been under depreciation pressure due to factors like US dollar strength, rising crude oil prices, and foreign capital outflows. The RBI periodically intervenes in both onshore and offshore markets to curb excessive volatility and defend the currency.
Key facts
RBI sold approximately $7 billion on July 24 to defend the rupee.
Intervention occurred in both onshore and offshore forex markets.
The rupee was approaching its all-time low against the US dollar.
The central bank's action was aimed at preventing a sharp depreciation.
Large-scale intervention signals RBI's commitment to currency stability.
Prelims pointers
- RBI: Reserve Bank of India, central bank of India.
- Forex intervention: RBI buys/sells dollars to influence rupee exchange rate.
- Rupee depreciation: fall in value of rupee vs foreign currencies.
- Record low: rupee's weakest level ever against US dollar.
- Onshore market: domestic forex market in India.
- Offshore market: forex market outside India (e.g., NDF market).
Mains angles
- Role of RBI in managing exchange rate volatility.
- Impact of forex intervention on foreign exchange reserves.
- Trade-off between currency stability and export competitiveness.
- Effect of global factors (US Fed policy, crude oil) on rupee.