NEW DELHI, Jan. 15 -- The Indian rupee depreciated by 2.6% in 2020 despite record dollar inflows coming into the country, thanks to the Reserve Bank of India's (RBI) relentless absorption of the inflows.
The upside of this intervention has been a record pile of forex reserves that has served as a confidence booster for the markets.
Indeed, RBI's interventions have been looked upon as prudent given that the economy was in no shape to absorb inflows during a recession.
While there were many reasons for RBI's intervention, the main one was to filter out inflows during a recession.
Amid the pandemic, the collapse of domestic demand for imports led to a record current account surplus. The surge of dollar inflows only inflated the overall bal...