It appears that the Indian central bank, the Reserve Bank of India (RBI), is likely selling dollars through public sector banks as the Indian rupee approaches a record low. The rupee’s exchange rate against the U.S. dollar was reported at 83.2025, slightly down from the opening rate of 83.09 and very close to the all-time low of 83.29.
Traders have noted the presence of public sector banks on the selling side of the USD/INR (U.S. dollar to Indian rupee) market, and this is believed to be acting on behalf of the RBI. Specifically, two large public sector banks have been prominent sellers of dollars, according to the information provided by traders.
It’s worth mentioning that the RBI has been offering dollars at different price levels in the market and doesn’t seem to be sticking to a specific exchange rate target at this moment. Despite the RBI’s efforts, there is concern that the rupee could still reach a new record low, as the selling of dollars appears to be easily absorbed without causing significant appreciation of the rupee against the dollar. This suggests that the market dynamics and external factors may be putting downward pressure on the rupee, making it challenging for the RBI to stabilize its value at the moment.
