RBI Intervenes to Keep Rupee Steady Amid Dollar Strength

The Reserve Bank of India (RBI) has been selling US dollars at the currency market's opening bell, helping to keep the rupee steady despite rising oil prices and a strengthening dollar. This move is seen as a key factor in keeping the USD/INR exchange rate rangebound around 94.46.

Traders and bankers note that the RBI has been intervening near the open all week, which discourages one-way bets and compresses day-to-day trading ranges. The central bank's ability to do this may have improved due to its 'special schemes' attracting over $136 billion in reserves, giving it a larger buffer to draw on when selling dollars.

The RBI's actions are seen as setting expectations early, making one-way bets riskier and more expensive. This shift is expected to impact the action from spot rates to hedging, where companies and investors pay up to protect themselves from sudden jumps in the pair.