India’s central bank sold net $9.8 billion in March as Iran war battered rupee, bulletin shows

MUMBAI, May 22(Reuters) – The Reserve Bank of India sold $9.76 billion in the foreign exchange market in March ‌on a net basis, turning into a net seller ‌of dollars after two months of purchases as the Iran war battered the ​South Asian currency.

The Indian rupee fell 4% in March to post its steepest monthly decline in over 6 years as a surge in energy prices following the start of the Iran left ‌India staring at steep ⁠risks to its growth-inflation balance.

In the month to which the data pertains, the rupee had declined ⁠to its then record low of 95.21 per dollar, drawing stern regulatory measures to manage volatility.

During the month, the RBI purchased $19.88 billion ​and sold $29.64 ​billion. In February, it had ​net bought $7.4 billion.

The RBI’s ‌net outstanding forward dollar sales stood at $103.06 billion as of end-March, compared with $77.7 billion at the end of the previous month.

The Iran war has disrupted global energy markets, sparking a record pace of foreign portfolio outflows from Indian stocks and bonds as ‌investors fret over the risks to ​India which imports most of its ​energy.

The currency has since ​extended its decline and hit a record low ‌of 96.96 per dollar earlier this ​week on ​Wednesday. Dollar selling interventions by the central bank on Thursday and Friday, meanwhile, helped it recover and close at ​95.69 on Friday.

India’s central ‌bank intervenes in the spot and forward markets to ​curb exchange rate volatility.

(Reporting by Jaspreet Kalra and Nishit ​Navin; Editing by Nivedita Bhattacharjee)