Indian central bank likely intervenes to defend rupee as oil prices climb, traders say
MUMBAI: The Reserve Bank of India likely intervened in the foreign exchange market on Friday to limit the rupee’s fall as a run-up in oil prices and U.S. bond yields pressured the currency, three FX traders at banks and one at an FX brokerage told Reuters . The Indian rupee declined as much as 0.4% to 95.7925 before paring losses to be last quoted at 95.71. State-run banks were spotted offering…
Mumbai: The Reserve Bank of India (RBI) likely intervened in the foreign exchange market on Friday to curb the rupee's decline, according to three forex traders at banks and one at an FX brokerage. The Indian rupee dropped as much as 0.4% to 95.7925 against the US dollar before stabilizing at 95.71. State-run banks were reportedly offering dollars, most likely on behalf of the RBI, the traders noted.
Brent oil prices surged to nearly $110 per barrel in Asian trading as fears surrounding the escalating Middle East conflict intensified. India's foreign exchange reserves rose by $45 billion on the previous week, reaching a record high due to robust capital inflows. The RBI also conducted dollar-rupee sell/buy swaps for the third consecutive day on Friday, likely part of its efforts to drain excess rupee liquidity from the banking system.
These swaps were described as "modest in size and concentrated in the up to 6-month maturity," according to a trader at a Mumbai-based bank. Earlier, the central bank's weaker-than-expected demand in its longer-duration rupee withdrawal auctions prompted an announcement of a shorter-duration auction.
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