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Summary:Traders say RBI likely sold US dollars before local market open.Rupee strengthened.Intervention reportedly conducted via large state-run bank.Move surprised market participants.Action occurred just before 9:00 a.m. IST spot openIndia’s central bank is believed to have stepped into currency markets ahead of Thursday’s local trading session, helping the rupee open stronger than expected, according to traders cited by Reuters.Six market participants said the Reserve Bank of India likely sold U.S. dollars before the domestic spot market opened at 9:00 a.m. IST. The intervention appeared to catch traders off guard and contributed to a firmer start for the rupee.The currency was initially expected to open little changed around 90.70 per dollar. Instead, it began the session near 90.4550 and was last quoted at 90.46, up roughly 0.26% on the day.One trader said a large state-run bank aggressively sold dollars, most likely acting on behalf of the RBI. Such indirect intervention via public-sector banks is a common operational method used by the central bank to manage currency volatility without making overt market appearances.The timing, just before the local spot market opened, suggests authorities may have sought to influence early price discovery and stabilise sentiment before liquidity deepened.The rupee has faced intermittent pressure amid global dollar strength and shifting expectations around U.S. interest rates. Emerging-market currencies broadly remain sensitive to U.S. data surprises and Federal Reserve policy signals.India’s central bank has historically adopted a “lean against the wind” approach, aiming to smooth excessive volatility rather than target a specific exchange rate level. Traders will be watching whether follow-through selling emerges in coming sessions or whether the move was a tactical adjustment to prevent a disorderly open.For now, the episode reinforces the RBI’s readiness to step in swiftly when market conditions warrant.
This article was written by Eamonn Sheridan at investinglive.com.
💡 DMK Insight
The RBI’s intervention in the forex market is a game-changer for traders right now. With the rupee strengthening against the dollar, this move indicates the central bank’s commitment to stabilizing the currency, especially ahead of critical economic data releases. Traders should be aware that such interventions can lead to increased volatility, particularly in pairs involving the INR. The timing of the intervention—just before the local market opened—suggests a strategic effort to manage market sentiment and prevent excessive depreciation. This could affect not only the USD/INR pair but also impact broader market dynamics, including equities and commodities linked to the rupee’s strength. Watch for how the rupee performs in the coming sessions; if it holds above key levels, it could signal a shift in market sentiment. On the flip side, if the rupee starts to weaken again, it might prompt further interventions, creating a cycle of volatility. Keep an eye on the USD/INR pair around the 82.00 level; a break below could lead to a stronger rupee, while a failure to hold could trigger a sell-off. Traders should also monitor upcoming economic indicators that could influence RBI’s future actions.
📮 Takeaway
Watch the USD/INR pair closely; a sustained hold below 82.00 could signal further rupee strength, while a failure to maintain this level may prompt additional RBI interventions.
