As RBI spreads out Fx interventions, forward premium hits 11-year lows

The central bank looks to protect headline reserves, deter offshore/onshore arbitrage on Rs with buy-sell swaps in forex market

At a time when its foreign exchange reserves have witnessed a rapid decline, the Reserve Bank of India (RBI) is said to have stepped up interventions in the forwards segment of the currency market, which has caused the dollar/rupee forward premium to fall to 11-year lows, traders said.

The RBI has been intervening in the foreign exchange market through dollar sales to prevent excessive volatility in the rupee amid a strengthening US dollar. The rupee has depreciated 9.7 per cent versus the dollar, so far, in 2022.

According to the latest data, the RBI’s net outstanding forward purchases of the