RBI’s silence in forex market may set stage for monetary policy surprise

Even as the Indian rupee touched a new record low and crossed a psychological level of 90 against the US dollar, the Reserve Bank of India (RBI) is seen absent in the market with just limited intervention at certain levels.

Currency experts expect that the limited intervention is suggesting a potential surprise in the upcoming monetary policy. It may even be a significant announcement or commentary from the central bank in the December policy announcement, said sources who didn’t want to be named.

Intervention by RBI

A treasury head with a bank said that the RBI may have intervened at the certain level of 90.16-90.17 against the US dollar. “The intervention was done 2-3 times by the central bank,” he said as the INR crossed the psychological mark of 90.

“There could be some announcements or clarification in the monetary policy for recent weakness in the rupee,” said Dilip Parmar, a foreign exchange analyst at HDFC Securities.

“RBI intervention has not been there, thus gates opened from 88.81 levels till current 90.29 levels, they are letting demand and supply to find a new range,” Kunal Sodhani. Head of Treasury, Shinhan Bank India said.

Further, Gaura Sengupta, Economist at IDFC First Bank, said the reduced forex intervention will limit the drain on domestic liquidity, preventing tightness in liquidity conditions.

Record low opening

The local currency opened at an all-time low and crossed the 90-mark against the US dollar on persistent equity outflows and uncertainty around the India-US trade deal.

At 2:15 PM, the domestic currency was trading at 90.1450 against the US dollar, as compared to 89.9625 at open and 89.8750 against the greenback at previous close.

RBI’s expected stance

Experts said that the central bank is expected to acknowledge the currency’s depreciation in the monetary policy, but may avoid signalling any levels to the currency.

The MPC begins it meeting later in the day on December 3, and the interest rate decision is due on December 5.

According to Bloomberg data, the Indian rupee depreciated 5.08 percent between December 31, 2024, and December 3, 2025. It has become the worst-performing currency among Asian peers, after the Indonesian Rupiah, which depreciated 3.17 percent during same period. Philippine's Peso depreciated 1.54 percent, and Hong Kong Dollar depreciated 0.18 percent.