MUMBAI: The Indian rupee rallied to close above the 96-per-dollar mark for the first time in a week on Friday, helped bythe central bank’s aggressive interventions to arrest the currency’s slide from 94.50 to nearly 97.
The rupee closed at 95.69 per dollar, up 0.5 percent from its close in the previous session.
The Reserve Bank of India sold USD2 billion to USD3 billion on Thursday and intervened in the markets again on Friday, according to bankers.
Two state-run lenders were consistently selling dollars through Friday’s trading session, three traders told Reuters, adding that this marked a change from relatively subdued and intermittent activity in the earlier part of the week.
“It seems the RBI’s intends to draw some version of a line-in-the-sand for rupee weakness,” a senior trader at a foreign bank said. The currency had weakened from 94.50 on May 8 to a record low of 96.96 on May 20.
State-run banks were spotted conducting dollar-rupee buy/sell swaps as well, most likely on behalf of the RBI, the bankers added. Dollar-rupee forward premiums fell as a result, with the 1-year implied yield down 6 basis points at 3.39 percent.
The central banks’ presence also ensured that the rupee was largely unfazed by a more than 2 percent rise in Brent crude prices to USD105 per barrel on Friday as investors doubted the prospect of a breakthrough in US-Iran talks.
Comments