RBI likely thwarted the rupee’s attempt to go below 83 per US dollar.

by Mapping Returns

State-run banks sold dollars after the local currency on the interbank order matching system dropped to 82.9950 rupees , possibly on behalf of the RBI.

The surge of the dollar against its main rivals and importer hedging drove the Indian rupee down against the dollar on Tuesday, but the Reserve Bank of India’s likely intervention prevented the dip from reaching the 83-per-dollar level.

The rupee fell from 82.7375 in the previous session to settle at 82.8800 to the dollar.

State-run banks likely sold dollars on behalf of the RBI when the local currency on the interbank order matching system dropped to 82.9950, according to three dealers who spoke to Reuters.

The central bank’s intervention was consistent with its recent trading session behaviour, which traders believe is what caused the rupee to continually find support near the 82.90 level.

Anil Bhansali, head of treasury at Finrex Treasury Advisors, stated, “(The) RBI is not allowing it (USD/INR) to rise higher and so it is unable to cross 83.00 for the present.”

He continued, “For unhedged positions of importers, the 83.05-level should be a stop-loss.”

The climb of the dollar against its major counterparts further weakened the rupee, which was already under pressure due to importer hedging. The dollar index increased by over 1%.

The multitude of important U.S. economic data will be closely watched by the dollar index as it looks to bounce back from an almost 8% fall in the previous quarter. The monthly jobs report and U.S. ISM manufacturing and services figures are both due later this week.

The rise in the dollar occurred despite falling Treasury yields and a generally positive risk appetite. U.S. equities futures were up by 1%, and European shares increased by 1.5%.

Following rash rate increases by important central banks, investors are paying close attention to the prospects for global growth. Investors will be able to determine the health of the economy and the expected course of interest rates in the US thanks to this week’s U.S. statistics.

Rupee premiums also had a bumpy session, with the 1-year implied yield fluctuating between 1.95% and 2.02%.

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