RBI sells $2–3 billion to defend rupee, pushes currency past 96 per dollar: Report – Firstpost

The rupee staged a sharp recovery after aggressive dollar sales by the Reserve Bank of India (RBI), which is estimated to have sold $2 billion to $3 billion on Thursday and intervened again on Friday, lifting the currency back above the 96-per-dollar mark, Reuters reported, citing bankers and market participants.

According to the report, around $500 million was sold in pre-market trade on Thursday, with thin liquidity conditions amplifying the impact of the intervention. The RBI continued its dollar sales into Friday as well, helping the rupee extend gains beyond the 96 level.

The scale of intervention was higher than in recent sessions, when daily dollar sales were estimated at about $1 billion, Reuters reported.

Bankers, who requested anonymity as they are not authorised to speak publicly, said intervention estimates are derived from market intelligence, including activity in state-run banks, FX broker flows and electronic order-matching platforms.

India’s trade minister Piyush Goyal said on Thursday the government was considering multiple measures to address the rupee’s weakness after the currency hit a series of record lows in recent weeks.

Market participants said the RBI’s approach appeared to have shifted, with intervention now more assertive than in earlier sessions. Until recently, the central bank had been supplying dollars at prevailing market levels. However, Thursday’s action was seen as more “level-agnostic”, aimed at triggering a rally and discouraging speculative positioning.

“The RBI is currently the sole major (dollar) seller,” a treasury official at a private-sector bank told Reuters, adding that without moderation in oil prices, it was likely to remain so.

Analysts said elevated crude oil prices, driven by geopolitical tensions in West Asia, remain a key pressure point for the rupee. As India is the world’s third-largest crude importer, higher oil prices increase dollar demand from refiners and widen the country’s external payment burden.

The depreciation pressure has also encouraged importers to step up hedging of forward dollar payments, reinforcing structural demand for foreign currency and adding to the rupee’s weakness bias.

Such pre-market intervention has previously been used by the RBI to curb speculative positions and temper expectations of further depreciation. The rupee had fallen roughly 2.5 per cent in the two weeks leading up to Thursday’s intervention, Reuters reported.