RBI Steps In to Support Rupee Amid Rising Oil Prices and Dollar Demand
The Reserve Bank of India (RBI) likely intervened in the foreign exchange market on Tuesday to stabilize the rupee amid rising oil prices and persistent corporate demand for dollars, according to four traders who spoke to Reuters. The rupee remained steady at 95.7350 per dollar, fluctuating within a narrow range as the central bank’s actions helped maintain low volatility. State-run banks were observed selling dollars, likely acting on behalf of the RBI.
Rupee Holds Steady Amid RBI Support
The rupee opened at 95.74 per dollar, down 4 paise from the previous day’s close. On Monday, it had settled at 95.70, marking a slight increase of 1 paisa. Forex traders indicated that high crude prices and demand from importers were exerting downward pressure on the currency. However, the RBI’s intervention through state-run banks prevented a more significant decline. The rupee has remained within a tight range for approximately two weeks, with oil companies and the RBI buying dollars at the lower end and the central bank selling dollars around the 95.75 mark.
Oil Prices and Geopolitical Tensions Impact Currency
Brent crude, the global oil benchmark, was trading 0.30% higher at $92.45 a barrel. The dollar index, which measures the US currency against a basket of six major currencies, stood at 99.04, up 0.04%. This increase was driven by safe-haven demand following the escalation of US sanctions on Iran. The rupee has also been pressured by renewed geopolitical uncertainty surrounding Iran and a downturn in Asian equities. In domestic markets, the Sensex fell 30 points to 77,336.32, while the Nifty declined by 38.80 points to 24,179.50 in early trading. Despite this, foreign institutional investors purchased Indian equities worth Rs 1,181.66 crore on a net basis on Monday.
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