RBI's Strategic Forex Sales to Stabilize the Rupee

In a significant move to stabilize the rupee, the Reserve Bank of India (RBI) sold $20 billion from its forex reserves in November, as revealed by recent data. This action underscores the central bank's proactive approach to managing currency volatility.

Nomura's Perspective on RBI's Forex Strategy

Amidst market speculation on the RBI's next steps, foreign brokerage Nomura suggests there's room for an additional $138 billion in forex sales. Since October 2024, the RBI has net sold approximately $89.4 billion, a figure that includes both spot and forward transactions. Despite these substantial sales, India's forex reserves remain robust, with an adequacy ratio of about 236% as of January 3, 2025.

India's Forex Reserve Adequacy Remains Strong

Nomura highlights that while there has been a decline from the peak of 266% in September 2024, the current level of forex reserves is still considered strong. This resilience is a testament to the RBI's effective management of the country's forex reserves, ensuring economic stability and investor confidence.