MUMBAI: The Reserve Bank of India (RBI) likely intervened on Monday to stem the rupee’s slide after it briefly touched an all-time low of 87.99 against the US dollar. The local unit later pared losses and settled flat at 87.50, aided by strong dollar selling by the central bank.
Traders said the RBI’s intervention was evident from the start of trade, with dollar sales suspected around the 87.95 mark. This helped the rupee recover to 87.64 at one point before stabilising. Market estimates suggest the central bank may have sold $1-2 billion to defend the currency.
“The non-deliverable forward (NDF) market indicated an opening at 88, but RBI’s strong intervention prevented a breach,” said Anil Kumar, head of treasury at Finrex Treasury Advisors. He added that the 88-level has been a key resistance for some time.
The rupee has been under pressure due to a strengthening dollar and concerns over a global trade war. US President Donald Trump’s announcement of a 25 per cent tariff on steel and aluminum imports, along with reciprocal tariffs on countries taxing US exports, fueled fresh volatility.
Other Asian currencies
Other Asian currencies also weakened, with the Chinese yuan slipping 0.2 per cent to 7.31 per dollar. The dollar index, which measures the greenback’s strength against a basket of major currencies, rose to 108.41.
Year to date, the rupee has been the worst-performing Asian currency, depreciating 2.6 per cent since November. On January 31, it logged its steepest single-day fall in nearly two years, hitting 86.70 per dollar.
Since September, the RBI has spent around $77 billion from its forex reserves to stabilise the rupee. As of January 31, India’s foreign exchange reserves stood at $630.6 billion.
Traders expect the rupee to remain volatile, with a near-term range of 87.25 to 87.80, as markets await inflation data from India and the US this week.
