RBI likely selling dollars to support rupee amid West Asia crisis: Traders

The ‌traders noted that the central bank's dollar sales via state-run banks were not aggressive, and were likely intended to limit volatility

The Reserve Bank of India likely intervened in the foreign exchange market ​on Monday, five traders told Reuters, ​as the currency came under pressure due to ‌a sharp rise in oil prices after conflict broke out in the Middle East over the weekend.

The traders said the central bank's dollar sales through state-run banks were not aggressive, and were likely intended to limit volatility rather than hold the currency at a specific level.

The rupee was last at 91.3750 per dollar, down nearly ‌0.4 per cent, after touching 91.4250 earlier in the day. Asian currencies were weaker across the board, while regional stocks also endured losses as risk appetite receded from global markets.

 

The central bank was present in the market but its activity ??was "very mild," one ​of the traders said. Portfolio flows likely related to the rebalancing of ‌a global equity index also influenced the rupee's movement on the day, they added.

India's ​benchmark ‌equity indexes, the BSE Sensex and Nifty 50, were down ‌more than 1 per cent each, while the yield on the country's 10-year benchmark bond rose more than ‌3 ​bps to 6.6955 per cent.

The ​RBI was likely active in the non-deliverable forwards market as well to support the rupee, ‌two other ​traders said.