India cenbank likely sold $2-$3 bln in week to Feb. 10 to prop rupee-economists

By Nimesh Vora and Anushka Trivedi MUMBAI, Feb 20 (Reuters) - The Reserve Bank of India (RBI) sold anywhere between $2 billion to $3 billion in the forex market in the week to Feb. 10 to prevent the rupee from breaching the 83-per-dollar mark, analysts said, based on calculations after the latest forex reserves data. India's foreign exchange reserves fell $8.32 billion in the week to Feb. 10, logging their biggest weekly decline in more than 10 months, data released on Friday showed. The reserves declined to a one-month-low of $566.95 billion, from $575.27 billion the week earlier, which economists say was also due to the RBI's dollar sales, besides valuation changes. The rupee came under severe pressure that week after a robust U.S. jobs report prompted investors to reassess how much higher U.S. interest rates would rise. The rupee fell to a low of 82.7950 on Feb. 8, but managed to recover to end the week at 82.50, likely helped by RBI dollar sales — at least $3 billion worth that week, estimates Sakshi Gupta, principal economist at HDFC Bank. "This has perhaps helped the rupee stay below 83," she said. She points out the rupee has been fairly rangebound despite expectations of the peak U.S. Federal Reserve rate climbing to 5.30%, from a near-4.90% before the jobs data. The repricing of the terminal rate expectations has boosted demand for the dollar - the dollar index has been up for three straight weeks. In the week ended Feb. 10, the dollar index advanced 0.6%, while the 10-year U.S. bond yield rose about 20 bps.

"The dollar index's move that week gives you not more than $2 billion of revaluation impact. There's likely to be a decent amount of impact from a move higher in U.S. yields," Vivek Kumar, economist at QuantEco Research, said. Plus, "there's reason to believe the RBI was active in the domestic markets". Gaura Sen Gupta, an economist at IDFC Bank, estimates that the RBI sold about $2 billion in dollars that week. Still, economists were not concerned about the drawdown in the reserves. "In terms of where overall numbers are, an $8 billion drop is not very worrying," Rahul Bajoria, chief India economist at Barclays Bank, said. "There's clearly pressure on the currency and it looks like there's been visible intervention around 83." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Weekly change in India's FX reserves ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Anushka Trivedi and Nimesh Vora; Editing by Swati Bhat, Savio D'Souza, and Janane Venkatraman)

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