Indian Rupee Surges on RBI Intervention and Strong GDP Data
The Indian Rupee (INR) has reached a two-month high against the US Dollar (USD), driven by likely Reserve Bank of India (RBI) intervention, stronger-than-expected Q2 Gross Domestic Product (GDP) data, and a narrowed Fiscal Deficit. The USD/INR pair slumped to near 94.88, its lowest level in two months.
According to Reuters, the RBI has been intervening in spot and Non-Deliverable Forwards (NDFs) markets to support the Indian currency. However, there is doubt that the INR's strength is sustainable, as consistent RBI intervention leaves limited room for further USD selling by the central bank.
The RBI's total net short forward positions now stand at a record high of $137 billion in July, up from $104 billion in June. This reflects that the INR's appreciation may not be sustainable in the long term.