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USD/INR Briefly Reaches Fresh Cycle High, RBI Likely Sold Dollars at around 83.40

INDIA
  • USD/INR looked set to close at a fresh record high on Wednesday, with the pair seen spiking to a high of 83.4538 towards the end of the session, though it swiftly reversed the majority of its move higher at the close. The pair ultimately ended the session a moderate 0.11% higher, at 83.3725.
  • According to traders who spoke to Reuters, the RBI likely sold dollars at around 83.39-83.40, looking to cap further deprecation in the rupee amid strong dollar demand from local importers and oil companies.
  • Broad USD strength over the past month has been weighing on the rupee, while USD/INR price action suggests that the RBI are comfortable intervening at higher levels. Traders who spoke to Reuters last week noted the “surprising absence” of RBI intervention when the pair closed at a record high last Friday, though said then that the RBI had likely sold dollars close to the 83.38-83.39 levels.
  • The build up in FX reserves may also be contributing the broader slide in the rupee. According to Bloomberg’s estimates, the RBI bought $8.2bln of foreign currency assets during the week ending March 15.
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