RBI Intervention Boosts Rupee as Dollar Logs Three-Month Low
The Reserve Bank of India (RBI) has been selling dollars to stabilize the rupee, which is expected to open slightly stronger on Friday after a three-month low for the US dollar. Traders pointed out that the RBI was selling dollars near 95.75 per US dollar, and markets are treating this level as a near-term ceiling for USD/INR.
This intervention by the RBI has helped the rupee hold up better than other Asian currencies, which tend to fluctuate when oil prices jump. The timing of this move is significant, as crude oil prices have been volatile due to renewed US-Iran tensions, and the dollar has softened on signs of yen-supporting intervention and shifting expectations for US interest rates.
The RBI's actions are aimed at reshaping USD/INR hedges in the market. When a central bank repeatedly sells dollars at a specific level, it can change behavior beyond the day's spot move. Traders start to assume that USD/INR is less likely to break above that area, leading to changes in options pricing and import/export flows.