The Reserve Bank of India (RBI)’s net dollar-buying declined in April 2014 compared to the previous month, but was still substantially higher than the net purchase of $ 0.52 billion in April 2013.
On a net basis, the central bank bought dollars worth $ 5.8 billion in April, against $ 7.7 billion in March. In April, the central bank bought dollars worth $ 7.85 billion from the market and sold dollars worth $ 1.98 billion, according to RBI data.
RBI’s net dollar purchases for 2013-14 stood at $ 8.9 billion. In February, RBI net-sold dollars worth $ 530 million, against $ 1.92 billion in January.
On a net basis, the central bank was a buyer in the October-December 2013 period, as banks received huge dollar flows into foreign currency non-resident (banks), or FCNR(B) deposits, backed by RBI’s offer to swap dollars. Under the swap window, banks could swap fresh FCNR (B) dollar funds (deposits with maturity periods of at least three years) at a fixed rate of 3.5 per cent a year. The swap window was open till November 30, 2013. RBI also allowed banks to swap foreign borrowings. Together, the two swap windows mobilised $ 34 billion.
In April, the central bank’s net forward sales outstanding rose to $ 32.06 billion from $ 31.03 billion in March.
Meanwhile, the pace of funds flowing into non-resident Indian (NRI) deposits moderated in April — net flows stood at $ 1.22 billion in April, against $ 3.86 billion in January. In April, NRI deposits outstanding rose to $ 105.07 billion from $ 103.84 billion in March.