The Reserve Bank of India likely intervened in the foreign exchange market on Tuesday to protect the rupee from pressure caused by elevated oil prices and sustained corporate demand for dollars, four traders told Reuters.The rupee was little changed at 95.7350 per dollar, remaining within a trading range of less than one paisa as the central bank’s intervention kept volatility subdued.State-run banks were seen offering dollars, which traders said was most likely on behalf of the RBI.The central bank’s sustained intervention over recent trading sessions has kept the rupee anchored in a tight range despite volatility in global markets.
Rupee remains near 95.75 as RBI steps in
The rupee opened at 95.74 per dollar, down 4 paise from Monday’s close. It had settled 1 paisa higher at 95.70 on Monday.Forex traders told news agency PTI that elevated crude prices and importer demand for dollars were weighing on the currency, while RBI intervention through state-run banks helped prevent a sharper decline.The rupee has remained range-bound for about two weeks, with oil companies and the RBI buying dollars at the lower end of the range and the central bank selling dollars around the 95.75 level, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.“Overall, the rupee remains firmly range-bound around Rs 95.50–96.00, with oil prices and RBI intervention likely to remain the key near-term drivers,” Bhansali said, according to PTI.
Oil prices, Iran tensions keep pressure on rupee
Brent crude, the global oil benchmark, was trading 0.30% higher at $92.45 a barrel in futures trade, according to PTI.The dollar index, which measures the US currency against a basket of six major currencies, was at 99.04, up 0.04%, supported by safe-haven demand following the US escalation of sanctions on Iran.The rupee has also faced pressure from renewed geopolitical uncertainty around Iran and weakness in Asian equities.Meanwhile, India’s domestic equity markets opened lower on Tuesday. The Sensex fell 30 points to 77,336.32, while the Nifty declined 38.80 points to 24,179.50 in early trade.Foreign institutional investors, however, bought Indian equities worth Rs 1,181.66 crore on a net basis on Monday.Separately, the RBI’s special USD-INR forex swap facility for FCNR(B) deposits, overseas foreign currency borrowings and external commercial borrowings had mobilised $73 billion in foreign exchange inflows as of August 21.The inflows reflected strong participation from non-resident Indians, the report said.
