The Reserve Bank of India (RBI) has likely sold some of its dollars through public sector banks to prevent the Indian rupee from reaching an all-time low, according to six traders who spoke to Reuters.
The rupee was value at 83.0250 against the US dollar, which is a slight 0.1% decrease compare to the previous session. Before the usual opening time of 9:00 a.m., the rupee fell even further to 83.16 on the interbank order matching system. The RBI likely sold some dollars to help the rupee get back closer to the 83 level.
Ritesh Bhusari, the deputy general manager for treasury at South Indian Bank, explained that the RBI’s goal is to prevent big and sudden changes in the rupee’s value. By intervening in the foreign exchange market, it’s expect that the rupee won’t drop below 83.25. The lowest value the rupee has ever reached is 83.29, which happened in October of the previous year.
Even though there was a general expectation that the rupee would weaken, especially against the dollar and other Asian currencies, the RBI’s involvement will slow down how quickly the rupee’s value decreases, Bhusari added.
A senior trader from a private sector bank mentioned that the RBI took action today to immediately stop the belief that they would let the rupee’s value decrease significantly.