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Business News/ Economy / RBI intervenes to lift the sinking rupee at any cost: Report

RBI intervenes to lift the sinking rupee at any cost: Report

The Reserve Bank of India has considerable foreign exchange reserves and is prepared to defend the currency at any cost

A vegetable seller counts Indian rupee notes in Mumbai (AFP)Premium
A vegetable seller counts Indian rupee notes in Mumbai (AFP)

India’s central bank is intervening in all foreign-exchange markets and will continue to do so to protect the rupee that slid to a record low Monday, Bloomberg reported citing a person familiar with the matter.

The Reserve Bank of India sees its foreign-currency reserves of about $600 billion as a formidable stockpile that it will put to use against speculators. The RBI is seeking an orderly depreciation, said the report.

The rupee extended its losses and slumped 60 paise to close at a record low of 77.50 (provisional) against the US dollar today, pressured by the strength of the American currency overseas and unabated foreign fund outflows.

Forex traders said risk appetite has weakened amid mounting concerns about inflation that may trigger more aggressive rate hikes by global central banks.

The RBI intervened in the spot, forwards and non-deliverable forwards market on Monday, Bloomberg reported. The RBI sees pressure on the rupee from a weaker yuan and stronger dollar, rather than domestic reasons.

India relies on imports to meet about 80% of its oil needs and elevated energy prices threaten to quicken inflation and widen its current-account and trade deficits.

At the interbank foreign exchange market, the rupee opened lower at 77.17 against the greenback, and finally settled for the day at 77.50, down 60 paise over its previous close.

During the trading session, the rupee touched its lifetime low of 77.52. On Friday, the rupee had slumped 55 paise to close at 76.90. In the last two trading sessions, the rupee has lost 115 paise against the greenback.

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Published: 09 May 2022, 04:04 PM IST
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