The Reserve Bank of India stepped into the currency market with force on Wednesday, selling dollars to arrest the rupee’s sharp slide after the currency slipped close to the 91-per-dollar mark and hit successive record lows.
The RBI intervened aggressively in the foreign exchange market, selling dollars to support the rupee, bankers said, echoing its earlier heavy-handed moves to halt a one-way fall in the currency.
The rupee surged to an intraday high of 89.75 per dollar on the interbank order matching system, from levels near 91 seen before the intervention. It later gave up some gains and was last trading at 90.28.
Wednesday’s action mirrored RBI's interventions in October and November, when it stepped in aggressively on three occasions to disrupt persistent one-way moves in the currency. In each episode, the RBI sold dollars heavily in both the spot and non-deliverable forward (NDF) markets, triggering sharp intraday reversals.
Unlike previous interventions, which were carried out before local market hours, dollar sales on Wednesday came shortly after onshore trading began.
The intervention followed a slide of more than 1 percent over the previous four sessions, during which the rupee hit fresh lifetime lows each day. That period was marked by sustained dollar demand and a clear disconnect between the rupee and broader Asian currency trends, with traders pointing to growing speculative short positions.
Given the rupee’s recent price action, the risk of decisive RBI intervention had risen sharply, a currency trader at a bank said. The central bank, he added, is keen to prevent one-way moves that can fuel speculative runs and intensify importer hedging.
