Selling same as outflow.

"In a move aimed at improving liquidity in the banking system, the RBI has said that it will conduct a USD/ INR buy/sell swap auction on Feb 28 to inject Rs 860 billion into the banking system." That means a "$10 billion swap with a three-year tenor." "The Reserve Bank of India's (RBI) outstanding net forward sales of the dollar have surged to $67.93 billion as of 31 December 2024 as the central bank intensified its efforts to stabilize the rupee." These swaps do not affect our foreign exchange reserves for now but will reduce our reserves in future because "the RBI is expected to repurchase the dollars in the forward market on the prescribed dates." TIE. "Despite these efforts, India's banking system faced a liquidity deficit of Rs 1.7 trillion as on Feb 20." On 7 February, the RBI cut its policy rate by 25 basis points (BPS) to 6.25% (Mint) which is expected to reduce borrowing costs for individuals and companies, increasing spending and stimulating growth. India's foreign exchange reserves fell by $2.54 billion to $635.721 billion as on 14 February. Our reserves reached an all-time high of $704.885 billion in September 2024. TOI. That is a fall of over $69.164 billion, which, along with forward sales of $67.93 billion, means the RBI has sold a total of over $137 billion to defend the rupee. When the RBI sells dollars it sucks rupees out of the banking system, forcing banks to increase their lending rates and undoing the intended benefit of interest rate cut. According to members of the Monetary Policy Committee, the reduction in policy rate does not cause an outflow of foreign currency but may cause currency volatility. Mint. But, the RBI is selling dollars to control the so-called volatility which results in a decrease of foreign currency. The result is the same. A 5% fall in the value of the rupee results in a 35 bps rise in inflation, which hurts spending. In 2024, the US Federal Reserve cut its Funds rate by 0.5% in September, 0.25% in November and by 0.25% in December. CBS. In its meeting in January 2025, however, the Fed left its policy rate unchanged at 4.25%-4.5% and signaled fewer cuts this year. CNBC. The dollar fell to $1.12 to one euro as the Fed cut rates in 2024 but has hardened to $1.02 to one euro in January 2025 as the Fed held back. In mid-2024, the yen strengthened against the dollar when the Bank of Japan (BOJ) raised interest rates for the first time in 17 years but the dollar has gained since January. usbank.com. Thus, changes in interest rates affect the values of the dollar, the euro and the yen, but, according to the MPC, the rupee is immune. Even if that were true, there was a reversion in the yen carry trade when the BOJ changed its stance on interest rates. 'Carry trade' is when investors borrow in a currency with low interest rate and invest in markets with higher returns. Investopedia. As a result of the panic in carry trade, India saw a redemption amounting to $437 million in one week in August 2024. BS. Changes in interest rates affect the value of currencies. Selling by RBI is the same as "outflow". So, why are MPC members denying it? Have they been instructed to do so? If so, by whom?