Informist, Monday, May 9, 2022

--Banking source: RBI aggressively intervening in FX spot, futures 
--RBI interventions in FX mkts aim to tackle volatility 
--RBI action in NDF mkt to hurt Indian bks' positions 
--RBI unhappy with Indian bks' positions in NDF mkts 

By Pratiksha, Richard Fargose and T. Bijoy Idicheriah
 

MUMBAI - The Reserve Bank of India is aggressively intervening across foreign exchange markets, but with specific focus on the offshore non-deliverable forward markets where it is unhappy with the positions taken by some Indian banks, a banking industry source told Informist.

"The RBI is aggressively intervening across FX markets - spot, futures and NDF with an aim to tackle volatility. However, it is extremely unhappy with some of the NDF positions taken by Indian banks and aims to take a hard stand on such trades at such a sensitive time," the source said.

The spillover from offshore foreign exchange markets to onshore due to the growing size of the non-deliverable forward market was always a cause of concern for the RBI, as any disruption in the offshore market is beyond the purview of domestic policy and makes domestic markets volatile.

The RBI traditionally does not target any specific level of the rupee against the dollar, and insists that its interventions are meant to tackle volatility and any one-sided movement in the currency.

The rupee depreciated almost 0.8% and touched a record low of 77.5250 against the dollar today because the US currency surged globally on concerns of further hikes in interest rates by the US Federal Reserve on account of high inflation, along with the prospect of a global economic slowdown.

At 1507 IST, the dollar index was at 104.03, against 103.66 on Friday. It was at 103.75 on Thursday.

As per market participants, dollar sales by a few state-owned banks today, likely for the RBI, around 77.50 a dollar limited the fall in the rupee.  End

US$1 = 77.4600 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Aditya Sakorkar

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 Media Tel +91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2022. All rights reserved.