The Reserve Bank of India (central bank) is buying US dollars heavily to keep the rupee from appreciating amid a massive surge in capital inflows observed since early November’s coronavirus vaccine news.
“t intervention makes sense, as it’s offsetting a massive & temporary current account surplus due to COVID-19, a swing that’s a total outlier in the region. Why should exports suffer on top of everything else,” Robin Brooks, Chief Economist at the Institute of International Finance, tweeted.
India and other emerging market economies are experiencing huge inflows, with the Federal Reserve and other advanced nation central banks running ultra-easy monetary policies.
The Indian rupee traded near 73.50 per US dollar on Monday, having risen from 75.02 to 72.70 in the two months to Jan. 4.
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