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USD/INR Closes at Record High, Traders Note Lack of RBI Intervention

INR
  • Asian currencies were led weaker against the dollar overnight, though the rupee was a notable underperformer in the space. Spot USD/INR extended the bounce off the March lows to 0.94%, ending today’s session at 83.4250 – which is the highest recorded close for the pair. A substantial spike in USD/INR 1-month forward outrights was noted at 10:00GMT, in-line with the local equity close though lacking any obvious catalyst.
  • The significant moves lower in the rupee corroborate with suspicion that the RBI is allowing some asymmetric flexibility into its currency management, with the move higher in USD/INR following attempts from the RBI to keep the pair below, or close to, 83.00.
  • Indeed, trades who spoke to Reuters say aggressive local dollar demand led the declines in the rupee, alongside a “surprising absence” of RBI intervention.
  • While there remains no up-to-date data on FX intervention, the bank were clearly active in the market in early 2024, with data this week confirming the bank bought a net $1.95bln in FX spot in January (Prev. net $2.07bln in December).
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