Indian central bank likely intervenes to defend rupee as oil prices climb, traders say
- The RBI intervened in the FX market to support the rupee, battling pressures from rising oil prices and US bond yields
MUMBAI: The Reserve Bank of India likely intervened in the foreign exchange market on Friday to limit the rupee’s fall as a run-up in oil prices and U.S. bond yields pressured the currency, three FX traders at banks and one at an FX brokerage told Reuters.
The Indian rupee declined as much as 0.4% to 95.7925 before paring losses to be last quoted at 95.71.
State-run banks were spotted offering dollars, most likely on behalf of the RBI, the traders said.
Brent oil prices climbed to nearly $110 per barrel in Asia trading as investor worries deepened over the escalating conflict in the Middle East.
India’s FX reserves surge $45 billion on-week to hit record high on robust capital flows
The RBI also likely conducted dollar-rupee sell/buy swaps for the third straight session on Friday, as part of its measures to drain excess rupee liquidity from the banking system.
The swaps were “modest in size and concentrated in the up to 6-month maturity,” a trader at a Mumbai-based bank said.
Earlier in the day, weaker-than-expected demand in the central bank’s longer-duration rupee withdrawal auctions also prompted it to announce a shorter-duration auction.
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