RBI Steps In To Defend The Rupee's 95.80-96 Line

Traders say the Reserve Bank of India moved to defend the rupee’s 95.80–96 per dollar range by using state-run banks and continuing dollar-rupee swaps. The reported approach helped reduce the banking system’s liquidity surplus by about 55%, according to market participants. The rupee has been hovering near 95.80 per dollar, and traders believe the RBI wants to slow any further slide amid pressure from higher oil prices and weaker foreign inflows. One sign of direct involvement is that state-run banks were seen offering dollars, a method often used to intervene without the central bank trading outright. The bigger mechanism, traders say, involves swaps.