Ahead of monetary policy, RBI steps in with heavy dollar intervention

The rise in yields and the rupee would pose a huge challenge for the six-member monetary policy committee scheduled to announce its rates on Friday

The Reserve Bank of India (RBI) stepped in to break speculative positions in the currency market by intervening heavily, as the rupee approached 74 a dollar level a day before the monetary policy announcement.

The rupee had crossed 73 a dollar on Wednesday. This prompted the central bank to announce a special facility for oil marketing companies (OMCs) to enable them to directly access up to $10 billion from foreign markets without the need for hedging. But the companies must have a board-approved risk policy, the RBI had said.

Clearly, the market was unimpressed, given the annual dollar demand by