RBI steps up intervention in forwards, rupee weakens on heavy dollar demand

The central bank is parking these accumulated dollars in the forwards markets, which is improving liquidity for now at the cost of demand of dollar for a future date

Higher demand for the dollar in view of defence spending weakened the rupee on Tuesday, even as the Reserve Bank of India (RBI) continued to mop up the greenback, which kept coming in thanks to Reliance Jio’s stake sales. 

Currency dealers said nationalised banks had been quite active in buying dollars since the last few days, and a subsequent jump in the forward premium would indicate they were buying spot dollars on behalf of the central bank and selling them in the forward markets. 

Stock exchanges are also on the rise, which has helped the RBI accumulate dollars. The RBI