The Reserve Bank of India (RBI) reportedly intervened in currency markets on Tuesday to stabilize the rupee, which faced downward pressure from weakening global risk sentiment and dollar demand linked to expiring non-deliverable forward (NDF) contracts, according to five market traders.
After dipping to an intraday low of 87.3850 against the greenback, the Indian currency showed modest recovery at 87.2850 by late morning trading hours (11:30 AM IST). Market participants observed state-owned banks actively selling dollars around the 87.30 level - a move widely interpreted as proxy intervention by the central bank.
"The RBI's presence appears concentrated around the mid-day forex fixing window," noted a senior dealer at a private bank. "We could see renewed upward momentum in USD/INR once this support ebbs."
The maturity of NDF positions typically creates concentrated dollar buying during daily reference rate calculations, creating headwinds for emerging market currencies like the rupee. This comes despite broader dollar weakness, with the DXY index shedding over 3% through March.
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