MUMBAI – The Reserve Bank of India likely sold dollars via public sector banks to ensure that the rupee did not fall to a record low, six traders told Reuters.
The rupee was quoted at 83.0250 to the U.S. dollar, down about 0.1% from the previous session. On the interbank order matching system, before the normal OTC opening time of 9.00 a.m., the rupee had dropped to 83.16.
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The RBI likely sold dollars to pull the rupee back near the 83 level.
“The RBI wants to prevent volatility and one-sided moves in the rupee,” said Ritesh Bhusari, deputy general manager for treasury at private sector lender South Indian Bank.
“With the RBI intervening in the forex market, we think that it will be difficult for the rupee to depreciate below 83.25.”
The rupee’s record low is 83.29, reached in October last year.
Although he had a depreciating bias on the rupee, largely due to moves on the dollar and other Asian currencies, the RBI’s intervention will slow the pace of depreciation, Bhusari added.
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The RBI wanted to make sure today that expectations of them allowing the rupee to weaken to a record low “were cut short immediately”, a senior trader at a private sector bank said.
