Mumbai May 18: For the Reserve Bank of India, which was on dollar buying spree for a long time to contain appreciation of the rupee, this March was different. After nearly 27 months, the central bank sold about $1.5 billion in March 2008.

The last time RBI sold greenback was in December 2005. It had sold $6.54 billion to State Bank of India for redeeming India Millennium Deposits (IMD) in that month, according to RBI data.

Though, it sold US dollars in March 2008, on a net basis RBI continued to be buyer during the month and mopped up $2.8 billion in March. The rupee was showing a tendency for depreciation against dollar in March. It moved between 39.91 to 40.72 to a dollar and has only showed a declining trend since then.

The treasury head of a mid-sized public sector bank said that though the long time gap between two sale transaction evokes interest, it seems to be part of normal trading activity on the capital account.

According to RBI data, after purchasing $13.62 billion in January 2008, the highest purchase during any month in the last six financial years, the scale of buying from the market declined in February and March. The purchases for two months were estimated at $6.68 billion.

This drop in dollar buying is perhaps in sync with reversal in flow of funds to Indian capital market by foreign institutional investors (FIIs) who have invested heavily.

After investing about $6.5 billion in markets in January, a month in which BSE sensitive index touched a life time high of 21,206, FIIs took out funds from Indian markets in the next two months. The total outflow from FIIs in February and March was close to $ 10.63 billion.

RBI's total purchases for 2007-08 were $78 billion, almost three times more than those made in 2006-07. The net FII investments rose multifold to $ 20.3 billion in 2007-08 from $ 3.2 billion a year ago.