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"Reserve Bank of India net sold $6.5 billion in August, shows data - Business Standard"

Preventing Rupee Depreciation: The RBI intervenes in the foreign exchange market to prevent the Rupee from depreciating too rapidly. By selling dollars, the RBI increases the supply of dollars in the market, which can help to stabilize the exchange rate.  

Maintaining Confidence: A stable exchange rate helps to maintain confidence in the Indian economy and its currency. This can attract foreign investment and promote economic growth.

2. Inflation Control:

Curbing Imported Inflation: A depreciating Rupee can lead to higher prices for imported goods, contributing to inflation. By selling dollars, the RBI can help to control inflation by keeping the Rupee relatively stable.  

3. Managing External Debt:

Facilitating Debt Repayment: India has a significant amount of external debt denominated in dollars. Selling dollars can help to generate the foreign exchange needed to repay these debts.  

4. Liquidity Management:

Ensuring Adequate Liquidity: The RBI may sell dollars to ensure sufficient liquidity in the foreign exchange market, particularly during periods of volatility or stress.  

5. Strategic Reserves:

Maintaining Foreign Exchange Reserves: The RBI maintains a significant amount of foreign exchange reserves, primarily in dollars. Selling dollars can help to manage these reserves and ensure their optimal utilization.  

Important Note: The RBI's intervention in the foreign exchange market is not aimed at fixing a specific exchange rate, but rather at maintaining orderly market conditions and preventing excessive volatility. The decision to sell dollars is based on a variety of factors, including global economic conditions, domestic economic indicators, and market sentiment.