RBI likely steps in to defend rupee and drain excess cash, traders say
The rupee was last at 96.41 per dollar, recovering marginally from its over two-month low of 96.43 in early trading
The Reserve Bank of India (RBI) may have stepped in to defend the rupee and reduce excess cash in the banking system on Tuesday, according to four traders cited by Reuters. The traders reported that the RBI likely sold dollars in the foreign exchange market to support the rupee, which had recovered slightly to 96.41 per dollar from its two-month low of 96.43 earlier.
State-run banks were believed to have offered dollars, possibly acting on behalf of the RBI. Additionally, the RBI may have conducted dollar-rupee sell/buy swaps to drain surplus cash from the banking system, with dollar-rupee forward premiums increasing in response.
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