To control the liquidity effect of your forex operations, Reserve Bank India sold a record $18 billion in futures markets in June to protect the currency as the rupee became volatile to touch a new low during the month.

According to the latest data released by the Reserve Bank of India, in June, the Reserve Bank made net sales of $ 3.7 billion in the spot market and $ 18 billion in the futures market.

Data for the June intervention shows that the central bank has emerged as a net seller in the spot market for the first time in the current financial year. but has been more aggressive in the fore and

To protect the currency, foreign portfolio investors withdrew their investments amid a global liquidity crunch and an uncertain global outlook due to the Russia-Ukraine war. The rupee depreciated nearly 4 per cent between April and July this year.

“Between April and June 2022, reserve Bank of India Net sold $37 billion in currency futures and futures markets to manage rupee depreciation and volatility” Ananth Narayan is an associate professor, SPJIMR and senior India analyst, observatory group, “Including spot interventions, RBI has sold more than $45 billion during April-July to meet rising commodity imports, portfolio outflows and currency hedging demand by corporates.”

The sign of a fall in the dollar is also evident in the forex reserves numbers. It has fallen from $44 billion between April and July this year from $617 billion at the end of March to $573 billion at the end of July. The impact of the domestic currency is a erosion of about Rs 1.6 lakh crore. Hence it helps in controlling the domestic liquidity effect by intervening in the futures markets. “RBI has deployed interventions in both spot and forward space, which has helped in controlling the liquidity surplus which is also in line with RBI’s monetary policy” Rahul BajoriaChief Economist of India Barclays Capital,

While uncertainty remains on the global economic and liquidity situation, there are some green shoots which may help improve the outlook for any market to rein in dollar selling to some extent. Narain said, “Portfolio flows are now stabilizing, and with the reduction in commodity prices, the prospects for August look much better. However, much depends on the future trajectory of commodity prices and the strengthening of the dollar globally. depends on.”