RBI intervention in FX market increases as Rupee touches record low

rupee

The Reserve Bank of India (RBI) has increased its intervention in the currency market to defend the local currency after it slipped to a new record low today against the US dollar, currency traders said.

Traders added that the central bank is intervening in the currency futures and spot market to keep the rupee under control through state-owned banks and a few brokerage houses.

“RBI is clearly seen intervening in the market in futures and spot, that kept the rupee under check since morning,” a currency dealer with a state-owned bank said on condition of anonymity.

The Indian rupee today hit a record low of 85.1050 against the US dollar during the afternoon trade, as compared to 85.0838 at opening against the greenback. Timely intervention by the RBI has kept the Indian rupee at 85.0818 against the greenback, which is lower than previous record low levels, another trader at a brokerage firm said.

The local currency came under pressure in the last few weeks due to sluggish growth of the Indian economy and widened merchandise trade deficit. Additionally, it also came under pressure following the surge in the dollar index after the US Federal Reserve signalled fewer rate cuts in 2025.

To defend the local currency from falling sharply, the central bank has intervened in the market through non-deliverable forward market and spot market, which is visible in the reduction in foreign exchange reserves.

Usually, when the central bank sells dollars in the market, it uses its forex kitty and keeps local currency under control. Further, it also sells dollars in the forward market to reduce volatility.

(This is a developing story, please check back for more details)