India’s c. bank intervenes to stem rupee drop

The Reserve Bank of India (RBI) has instructed major banks to refrain from increasing their positions against the rupee to help stabilise the currency, which has hit record lows for three consecutive days.

Officials from the RBI’s financial markets regulation and operations department contacted large banks on Tuesday to prevent the rupee from falling below the 84/$ level in the spot market, according to four bankers who requested anonymity.

The rupee hit a record low of 83.96 against the US dollar on Tuesday, prompting concerns about further depreciation.

In response, the RBI’s financial markets regulation and operations department contacted leading banks to express its concerns about the currency’s volatility.

To prevent the rupee from breaching the crucial 84 level, the central bank is believed to have sold approximately $1.5 billion in the non-deliverable forward market.

Attribution: Reuters