RBI Intervenes to Support Rupee, Traders Report
Rupee Opens Stronger on Friday Amid Reserve Bank Intervention
The Reserve Bank of India (RBI) likely intervened in the foreign exchange market on Friday to support the rupee ahead of the local spot market open. According to five traders who spoke to Reuters, the central bank's intervention helped the rupee kick off the local spot market session on a stronger note, opening at 95.55 per U.S. dollar.
Prior to the likely intervention, the rupee was trading at around 95.77-95.78 per dollar. However, following state-run banks' dollar sales, most likely on behalf of the RBI, the currency jumped quickly. This sudden increase is believed to be a result of the central bank's intervention in the foreign exchange market.
Despite the initial boost, traders expect the rupee to face pressure on Friday due to outflows related to maturing contracts in the non-deliverable forward market. Furthermore, the decline in oil prices following reports of a ceasefire extension between the U.S. and Iran may also contribute to the rupee's volatility.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
| Time Frame | Rupee Rate (per USD) |
|---|---|
| Pre-Intervention | 95.77-95.78 |
| Post-Intervention (Opening) | 95.55 |
| Expected Pressure | 95.77-95.78 (following outflows) |
Note: The table above highlights the rupee's rate before and after the RBI's intervention, as well as the expected pressure it may face due to outflows in the non-deliverable forward market.
Investor Takeaway
The RBI's intervention may provide temporary support to the rupee, but traders expect pressure from maturing contracts in the non-deliverable forward market.
More in Economy
Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
MoSPI Releases Uniform Norms for DDP Estimates with 2022-23 Base Year
