Informist, Thursday, May 12, 2022

By Pratiksha, Richard Fargose and T. Bijoy Idicheriah 

MUMBAI - The Reserve Bank of India is aggressively intervening in the domestic foreign exchange market with a view to prevent the rupee from depreciating below the psychologically crucial 77.50 rupee to a dollar level, a banking industry source told Informist.

“There are some market participants that have self-fulfilling views on the rupee at 78 and 80 and the RBI wants to counter this narrative with its interventions. For now, the RBI is intent on intervening to protect the rupee at 77.50 rupees to a dollar,” the source said.

The interventions in currency today are focused on the domestic spot and futures markets, as compared to large interventions in the offshore non-deliverable forwards markets in the last few sessions.

Earlier today, the rupee fell to a fresh all-time low of 77.6250 a dollar, and retraced to 77.3600 a dollar. It closed at 77.4150 a dollar today.

On Friday, Informist had reported that the RBI was aggressively intervening in all segments of the foreign exchange markets including the offshore non-deliverable forwards and spot-futures in the domestic markets. 

Separately on Monday, Informist reported that RBI was intervening in the NDF market and was critical of some positions taken by Indian banks there. Additionally, on the same day, Informist reported that the RBI intervened after the rupee fell to the then all-time low of 77.5250, with an aim to defend 77.50 rupees to a dollar. 

The source said while the RBI was not against natural movements in the rupee, it was not keen to let market forces with a vested view drive the Indian currency lower. 

These actions by the RBI are in sync with the monetary policy stance as it helps contain the impact of imported inflation by preventing a runaway decline in the rupee. It is also in line with the RBI’s stated stance on liquidity management, as dollar sales effectively help the RBI to suck out more excess rupee liquidity from the markets, the source said.

Currently, India's foreign exchange reserves are at $598 bln, down over $35 bln since the beginning of the war in Ukraine.  End

Edited by Michael Correya

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist, Thursday, May 12, 2022

By Pratiksha, Richard Fargose and T. Bijoy Idicheriah 

MUMBAI - The Reserve Bank of India is aggressively intervening in the domestic foreign exchange market with a view to prevent the rupee from depreciating below the psychologically crucial 77.50 rupee to a dollar level, a banking industry source told Informist.

“There are some market participants that have self-fulfilling views on the rupee at 78 and 80 and the RBI wants to counter this narrative with its interventions. For now, the RBI is intent on intervening to protect the rupee at 77.50 rupees to a dollar,” the source said.

The interventions in currency today are focused on the domestic spot and futures markets, as compared to large interventions in the offshore non-deliverable forwards markets in the last few sessions.

Earlier today, the rupee fell to a fresh all-time low of 77.6250 a dollar, and retraced to 77.3600 a dollar. It closed at 77.4150 a dollar today.

On Friday, Informist had reported that the RBI was aggressively intervening in all segments of the foreign exchange markets including the offshore non-deliverable forwards and spot-futures in the domestic markets. 

Separately on Monday, Informist reported that RBI was intervening in the NDF market and was critical of some positions taken by Indian banks there. Additionally, on the same day, Informist reported that the RBI intervened after the rupee fell to the then all-time low of 77.5250, with an aim to defend 77.50 rupees to a dollar. 

The source said while the RBI was not against natural movements in the rupee, it was not keen to let market forces with a vested view drive the Indian currency lower. 

These actions by the RBI are in sync with the monetary policy stance as it helps contain the impact of imported inflation by preventing a runaway decline in the rupee. It is also in line with the RBI’s stated stance on liquidity management, as dollar sales effectively help the RBI to suck out more excess rupee liquidity from the markets, the source said.

Currently, India's foreign exchange reserves are at $598 bln, down over $35 bln since the beginning of the war in Ukraine.  End

Edited by Michael Correya

Cogencis news is now Informist. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.