The Reserve Bank of India likely intervened in the foreign exchange market on Friday to support the rupee, according to three traders cited by Reuters, as elevated oil prices and sustained corporate hedging flows continued to weigh on the currency.
The rupee was little changed at 95.6875 per dollar on Friday and was on course for a modest weekly decline. The movement came amid continued pressure in the foreign exchange market, with traders pointing to the central bank’s efforts to limit further weakness in the currency.
The intervention marks another step in what traders described as a sustained effort by the RBI over the past two weeks to stabilise the rupee. Persistent intervention during that period has helped anchor the currency, according to the traders, signalling the central bank’s continued presence in the foreign exchange market as pressure on the rupee has remained elevated.
State-run banks were also offering dollars in the market on Friday, most likely on behalf of the RBI, according to a trader at a private bank. The activity suggested that official support for the rupee remained active even as the currency traded little changed against the dollar.
The intervention comes against a backdrop of elevated oil prices, which have added pressure to the rupee. Sustained corporate hedging flows have also contributed to demand for dollars, according to the traders. Together, those pressures have kept the currency under strain and increased the importance of the RBI’s role in limiting volatility.
Despite the reported intervention, the rupee remained close to its prevailing levels on Friday, trading at 95.6875 per dollar. Its limited movement during the session indicated that official dollar selling may have helped contain pressure, although the currency remained on track for a modest weekly decline.
The RBI’s activity over the past two weeks therefore represents an ongoing effort to keep the rupee anchored while market pressures persist. The presence of state-run banks offering dollars added to indications among traders that the central bank was continuing to use the foreign exchange market to support the currency.
For markets, the developments highlight the pressure created when higher oil prices coincide with sustained demand for dollars from corporate hedging. While the rupee was little changed on Friday, the reported intervention showed that the RBI remained active in the market as it sought to protect the currency from further pressure.
The rupee’s trajectory will remain closely watched as these forces continue to shape trading conditions. For now, traders said persistent intervention by the RBI has helped anchor the currency, even as the rupee remained on course for a modest weekly decline.
