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INR: Rupee Supported by Further RBI Intervention Before Paring Gains

INR
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While USDINR initially extended this week’s decline by as much as 0.5% at the start of the APAC session amid another round of RBI intervention, the pair has since reversed losses and stands marginally higher as we approach the close.

  • Heavy intervention earlier in the week – which may have amounted to as much as $11bln – appears to have surprised markets given expectations that the RBI under the helm of Governor Malhotra would be more tolerant of a weaker rupee. The Governor said last week that the central bank wants “orderliness and stability” in the currency and doesn’t see the need to intervene daily.
  • The intervention was likely primarily in response to a build-up of bearish bets against the rupee as well as its sharp slide to a fresh record low earlier in the year, and has aided the improving sentiment towards the local currency. Indeed, 1-month USDINR risk reversals have dropped to levels not seen since October 2024.
  • Note that Prime Minister Narendra Modi will travel to the US today to meet with President Donald Trump. CPI data for January is due at 10:30GMT/16:00IST.
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While USDINR initially extended this week’s decline by as much as 0.5% at the start of the APAC session amid another round of RBI intervention, the pair has since reversed losses and stands marginally higher as we approach the close.

  • Heavy intervention earlier in the week – which may have amounted to as much as $11bln – appears to have surprised markets given expectations that the RBI under the helm of Governor Malhotra would be more tolerant of a weaker rupee. The Governor said last week that the central bank wants “orderliness and stability” in the currency and doesn’t see the need to intervene daily.
  • The intervention was likely primarily in response to a build-up of bearish bets against the rupee as well as its sharp slide to a fresh record low earlier in the year, and has aided the improving sentiment towards the local currency. Indeed, 1-month USDINR risk reversals have dropped to levels not seen since October 2024.
  • Note that Prime Minister Narendra Modi will travel to the US today to meet with President Donald Trump. CPI data for January is due at 10:30GMT/16:00IST.