RBI sells dollars in offshore market as rupee nears record low

The RBI has sold about $20 billion in foreign-exchange reserves over the six weeks since Sept. 15, according to analysts at HSBC Holdings Plc

India’s central bank intervened to support the rupee as it traded near a record low amid persistent concerns over US tariffs.

The authority sold dollars in the offshore non-deliverable forwards market on Friday, according to people familiar with the matter. The intervention was intermittent, in contrast to the heavier bouts of dollar sales seen last month, they said, asking not to be identified as they aren’t authorized to speak publicly.

The moves helped steady the currency as it neared its September record low of 88.8050 per dollar.

The central bank has been intervening in the foreign-exchange market in recent weeks to curb weakness in the currency, which risks fueling imported inflation and eroding returns for foreign investors. The RBI has sold about $20 billion in foreign-exchange reserves over the six weeks since Sept. 15, according to analysts at HSBC Holdings Plc.

A spokesperson for the RBI didn’t immediately reply to an email seeking comment.

The rupee rose 0.1% to 88.87 per dollar in the offshore forwards market after sliding 0.4% over the previous two sessions. It traded 0.1% weaker at 88.74 in the onshore market.

“For the USD/INR, the RBI’s presence is providing support whenever we approach the upside,” said VRC Reddy, head of treasury at Karur Vysya Bank Ltd. If India and the US manage to strike a trade deal soon, the rupee should strengthen to 87.80-87.90 per dollar, he said.

The rupee is down 3.5% this year and is among the worst performers in Asia, weighed by high US tariffs on Indian goods and $16 billion of foreign outflows from local stocks in the period.

While the rupee has lagged its peers this year, some analysts say the struggling currency could be positioned for a rebound once a trade deal with the US is finalized.

Citigroup Inc. recently advised investors to position for gains in the Indian rupee amid signs of an imminent trade agreement between Washington and New Delhi. The US lender joins global peers like ING Bank NV and Societe Generale SA in forecasting a recovery in the rupee.

The RBI’s actions come as other Asian central banks also step up support for their currencies, with the dollar strengthening amid reduced expectations for US rate cuts.

On Friday, South Korea stepped up its defense of the won, which approached a 16-year low this week, as authorities pledged to take action in coordination with the state-owned National Pension Service.