Rupee Recovers From All-Time Intra-Day Lows After RBI's Intervention

The rupee recovered from its record intra-day lows after the Reserve Bank of India's intervention in both the spot and the futures markets, limiting further losses.

At the interbank foreign exchange, the rupee opened weak at 77.67 against the dollar, then lost further ground to hit its record intra-day low of 77.7975 to a dollar.

PTI reported that the currency closed at 77.47 from Friday's close of 77.31 per dollar. But Bloomberg quoted the partially-convertible rupee at a new all-time low of 77.5663 against the greenback as of 05:59 AM Eastern Daylight Time (EDT).

After its previous record low close of 77.50 on Thursday, during which it hit an intra-day record weak level at that time of 77.63 against the American currency, the rupee recovered to end at 77.31 on Friday as the RBI intervened to stem the volatility.

Again on Tuesday, Reuters quoted traders and reported that the central bank started selling dollars via state-run banks at around 77.75 rupee levels helping the currency regain some ground. 

"Given that the RBI has ample FX reserves, we expect the rupee to remain more stable and weaken less than most other EM currencies against the greenback over the next couple of years," Adam Hoyes, assistant economist at Capital Economics, said in a note.

A strong rally in domestic equities also helped the rupee rebound. The forex market was closed on Monday on account of Buddha Purnima.

According to traders, the RBI has been active in both spot and futures markets in recent weeks to help limit sharp volatility in the rupee.

Sources had told NDTV that the central bank was participating in FX markets to shore up the rupee and curtail "jerky movements" in the currency.

Regarding currency depreciation worries for India, sources said that the RBI would participate in the market "to smoothen the impact" and "curtail jerky movements in the rupee."

But they had also added that the intervention would be to keep the currency range-bound and that the latest exchange rate movement was part of a broader global trend.