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Published: March 28, 2024
Updated: March 28, 2024

RBI's Timely Action Supports Rupee Amidst Potential Decline

Evaluating the Impact of RBI Intervention:

Market observers affirm that the Reserve Bank of India's (RBI) anticipated intervention in the foreign exchange (forex) market has prevented the rupee from plummeting to a new low. Despite initial depreciation, the rupee stabilized at Rs 83.33 per dollar, avoiding a record low.

Insights into Currency Dynamics:

Harsimran Sahni, Executive Vice-President and Head of Treasury at Anand Rathi Global Finance, notes that recent rupee depreciation can be attributed to the downward pressure exerted by the Chinese yuan. However, India's forex reserves, standing at a robust $642.49 billion as of March 15, 2024, have provided crucial support amidst market fluctuations.

Impact of Market Speculation:

Following a record closing low of Rs 83.43 against the dollar, market speculation regarding the absence of RBI intervention towards the end of trading hours led to sharp fluctuations in the rupee's value. Jateen Trivedi, Vice-President and Research Analyst at LKP Securities, anticipates continued volatility, with the rupee's range oscillating between 83.2 and 83.55.

Anticipated Market Trends:

As the financial year draws to a close, market participants anticipate heightened activity on the last trading day. Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, emphasizes the significance of RBI presence in supporting the rupee, particularly amidst regional currency bids and market closures.

Navigating Currency Fluctuations:

With the RBI's vigilant oversight and timely interventions, the rupee has remained resilient amidst external pressures. As market dynamics continue to evolve, the RBI's strategic actions play a crucial role in maintaining stability and confidence in India's currency.