India's RBI has spent half of $140 billion FX capital haul in rupee defence, bankers estimate

Business Recorder reported that the Reserve Bank of India has used roughly half of the more than $140 billion it raised through special measures earlier this year. According to the report, the drawdown points to heavy strain on the rupee and a central bank intent on reversing its slide.

Economists and FX traders at six banks attribute the drawdown mainly to dollar sales in the spot market and to dollar-rupee swaps used to soak up surplus rupee liquidity. Three economists put the deployment at between $75 billion and $80 billion since the measures took effect on June 8, after stripping out revaluation effects from weekly reserve data.

Pressure has come from high oil prices, a recent jump in US Treasury yields and continued foreign equity outflows, which led the central bank to increase its interventions. Reserves stood at $734.6 billion on October 2, about $51 billion below their early September peak, and Ambit said further declines could cast doubt on the central bank's capacity to protect the currency.