RBI Rescues INR’s Slump on Day 2 Despite Stressed Accounts & Forex Reserves

The Indian rupee continued to slide and hit a consecutive record low against the US dollar on Monday, falling to 82.68/$1 after opening at a fresh low against the greenback.

However, the domestic currency consolidated the losses and gained from less than 82.6 to over 82.4 on Monday in only 10 minutes, indicating the Reserve Bank of India’s intervention to arrest the home unit’s fall.

The central bank’s intervention to rescue the rupee’s fall has been confirmed by two banks and a Mumbai-based brokerage firm to Reuters.

This is the second straight session that has seen the central bank likely selling dollars through state-owned lenders to arrest the rupee’s fall.

According to a spot dealer at a private sector bank, “The RBI activity, in our opinion, is not more aggressive than in recent days. But the rupee has reacted much more than it does, which we think is basically a function of the levels we are at."

While the RBI was able to defend the Rupee successfully through the last round of simultaneous stress on current and capital accounts by spending its Reserves, this time around things are likely to be different, stated an IFA Global note.

Source: investing.com