RBI may have sold dollars to arrest rupee fall, say traders

Reserve Bank of India (RBI) may have sold dollars starting Rs 51.79 on Monday to arrest the sharp fall in the local currency, five traders said.

At 11:12 am (0542 GMT), the partially convertible rupee was at 51.60/61 per dollar, off its low of 51.7950 - its weakest since March 12, 2009. At the day’s low, the rupee was down 0.9 percent on the day.

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The rupee skidded for a fifth consecutive session on Monday to within sight of its record low, as oil importers bought dollars and subdued shares heightened fears of foreign fund outflows.

“The quantum has not been too high today, but they (RBI) likely sold starting 51.79 and up to 51.69 levels,” a senior dealer with a state-run bank said.

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The RBI has always maintained that it does not protect any particular level on the rupee and would only intervene to iron out excessive volatility.

RBI intervened in the foreign exchange market in September, after following a hands-off approach for nine straight months, as the unit fell to its lowest level in more than two years, its monthly bulletin showed earlier this month.

Reserve Bank of India releases intervention data with a two-month lag.

“We are concerned about slower growth, persistent inflation, and the ability to fund a current account deficit at a time when global investors are wary,” said Sean Callow, senior currency strategist, forex and commodities, Westpac Institutional Bank.

Traders forecast a 51.40 to 51.85 range for the rupee, with the next near-term target at 52.2, its record low reached in early March two years ago.

In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange were at 51.8125, while those on the MCX-SX and the United Stock Exchange were both at 51.8100. The total volume was at $1.2 billion.

Reuters