India cbank says buys $230 mln in Feb intervention

Apr 17, 2009
India's central bank bought a net $230 million in intervention in February even as the rupee fell to record lows, after selling $29 million in January, its monthly bulletin showed on Friday.

The Reserve Bank of India bought $1.06 billion and sold $833 million in February, becoming a net buyer of dollars for the first month since August.

The partially convertible rupee shed 4.4 percent in February. A sharp fall in the second half of the month took it past 51 per dollar for the first time, on its way to a record low of 52.20 per dollar in early March.

The partially convertible rupee has since recovered to close on Friday at 49.87/88 per dollar, trimming its losses in 2009 to 2.3 percent.

Foreign fund flows have a significant impact on the rupee's fortunes. Foreigners have bought a net of about $730 million of shares so far in April, trimming their net sales in 2009 to about $800 million as shares have rallied strongly.

In 2008, when the rupee fell 19 percent, foreigners were net sellers of more than $13 billion of stocks. In 2007, the rupee rallied more than 12 percent as foreigners were net buyers of more than $17 billion of stocks.

India's foreign exchange reserves have fallen to $253 billion on April 10 from a peak of $316 billion last May, partly reflecting the central bank's intervention to support the rupee.