RBI Steps In Again to Support the Rupee

The rupee came under pressure on Monday as oil prices went up and investors started expecting a possible US interest-rate hike. The currency opened at ₹95.49 per dollar and briefly fell to ₹95.60. 

RBI's Intervention 

The RBI has been active in the currency market in recent sessions. Its regular intervention has helped limit the impact of external factors on the rupee. 

One currency trader said the RBI was present from the start of Monday's trading. Traders are now looking at the ₹95.70-95.80 range as an important support level for the rupee. 

Oil Prices Add Pressure 

Oil prices also moved higher after the latest escalation involving the US and Iran. Brent crude rose 3.2% to $90.92 a barrel. 

Higher oil prices can put pressure on India's currency because India imports a large amount of its crude oil. A rise in the oil import bill can increase demand for dollars. 

At the same time, US Treasury yields moved higher as investors increased their bets on a possible US Federal Reserve rate hike at its September 15-16 meeting. 

RBI Also Acts in the Swap Market 

The RBI's actions were not limited to buying and selling dollars in the spot market. Bankers said the central bank also appeared to conduct short-term dollar-rupee buy/sell swaps. 

These swaps helped bring down overnight swap rates, which had risen in recent sessions because of high dollar liquidity coming from FCNR(B)-related inflows. 

The cash-tomorrow swap rate fell to around 0.75 paisa, compared with 2.8 paisa on Friday. The tomorrow-spot rate also fell to around 0.60 paisa. 

Read More: India Signs Agreement With US To Procure Javelin Anti-Tank Missile System for Army! 

Conclusion 

The rupee is facing pressure from two sides, higher oil prices and expectations of higher US interest rates. For now, the RBI's intervention is helping prevent a sharper fall in the currency. The coming days will show how long the central bank can keep the rupee stable if these external pressures continue. 

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