RBI intervenes to help rupee from hitting record low of Rs84 against dollar

MUMBAI: The Indian rupee settled at 83.97 per dollar on Tuesday, remaining virtually unchanged from the previous close.

This marks the same level reached on August 13 of this year, which was a record low.

“Today’s closing near Rs83.9750 suggests that the Reserve Bank of India (RBI) might have intervened by selling dollars to prevent the rupee from breaching the psychological Rs84 mark. Persistent risk-off sentiments drove dollar buying, while the RBI supplied dollars to manage the currency’s movement,” explained the head of treasury and executive director of a currency trading firm.

Drop in oil prices

The rupee’s losses were somewhat mitigated by the overnight drop in crude oil prices, which fell below $73 per barrel, the lowest level since December 2023.

The decline is attributed to increasing supplies and potential agreements to boost oil production by over 500,000 barrels per day.

Additionally, OPEC’s plan to raise output in the fourth quarter and ongoing demand uncertainties in major markets such as the US and China are putting downward pressure on oil prices.

Second-worst performing Asian currency

For the past month, the rupee has traded within a narrow range of 20 paise. Despite positive economic fundamentals, the currency remains range-bound due to the RBI’s active market interventions, noted Amit Pabari, managing director at CR Forex.

In August, the rupee was the second-worst performing Asian currency, following the Bangladesh taka.

It depreciated by 0.2 per cent during the month, with only these two currencies showing a decline against the US dollar.