The Reserve Bank of India (RBI) likely sold dollars on Monday to stabilize the rupee. The Indian currency hit an all-time low of 86.39 per U.S. dollar in early trade. Traders reported that state-run banks were seen offering dollars, likely on RBI’s instructions.
Rupee Hits Record Low
The rupee slumped to 86.39, its weakest level ever, before recovering slightly to 86.36 by 10:15 a.m. IST. The drop followed a surge in the U.S. dollar due to expectations that the Federal Reserve will ease rate cuts cautiously this year.
RBI’s Likely Strategy
Traders believe the RBI is allowing the rupee to weaken before stepping in to manage the fall. “The RBI seems to be capping the rise in USD/INR after bids thin out,” a senior trader said.
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Dollar Index Rises
The dollar index rose by 0.2%, reaching 109.9. Strong U.S. jobs data boosted the greenback, putting pressure on Asian currencies. Most currencies in the region weakened against the dollar on Monday.
Global Market Impact
The robust U.S. jobs data has changed expectations around Federal Reserve policy. Market participants now anticipate slower rate cuts by the Fed, further strengthening the dollar.
The rupee’s slide reflects global trends and rising demand for the dollar. The RBI’s intervention aims to prevent excessive volatility in currency markets. Traders will closely watch the central bank’s moves in the coming days.
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