The Indian rupee remained stable on Wednesday, as traders believe the Reserve Bank of India intervened to prevent a record low. The currency stood at 83.56 versus the U.S. dollar at 10:00 a.m. IST, unchanged from the previous close at 83.5650. It is speculated that the RBI intervened in the non-deliverable forwards (NDF) market prior to the local spot market opening at 9:00 a.m. IST to bolster the rupee. The RBI's regular interventions, including those in the NDF market, have been supporting the currency in recent sessions. RBI Governor Shaktikanta Das confirmed the change in intervention tactics during a post-monetary policy press conference on Friday, stating that the RBI is now more active in the forward market. Reuters previously reported that the RBI has shifted its strategy, with interventions in the NDF market now surpassing those in the spot market. Despite dollar demands from local oil companies, the rupee is expected to remain within a tight range as the RBI has indicated its intention to curb further depreciation. The dollar index was at 105.3, and Asian currencies were mostly stable, with investors anticipating key U.S. consumer inflation data and the Federal Reserve's policy decision later in the day. The Fed is anticipated to maintain rates steady, but new interest rate projections could introduce volatility, potentially pushing U.S. yields and the dollar higher, according to Lloyd Chan, senior currency analyst at MUFG Bank.
Text: Lara Palmer
12.06.2024
Reserve Bank of India's Tactical Shift in Currency Market Interventions Aids Stability