The rupee was at 90.04 against the U.S. dollar as of 10:15 a.m. IST, down marginally from its close at 90.0175 in the previous session.
Multiple interventions by the Reserve Bank of India this month have blunted appetite for wagers against the currency even as several factors – including the risk of fresh U.S. tariffs, weak portfolio flows and a persistent skew in hedging activity – continue to keep the currency under pressure.
The interventions seem geared towards “signalling to the market that the RBI will not tolerate one-way moves on the rupee,” a senior FX trader at a Mumbai-based bank said.
The central bank has stepped in at “very unexpected” levels, which is keeping traders on guard, especially when the currency moves below the 90 level, another trader at a bank said.
The dollar-rupee volatility skew reflects this, with the 1-month 25-delta risk reversal easing to -0.2, indicating that dollar-rupee puts are priced higher than calls. Put options pay off if the dollar-rupee pair falls.
Elevated demand to buy dollars at the central bank’s daily reference rate is hurting the local unit, the second trader said. The reference rate was quoting at around 0.50 paisa premium on Friday, indicating elevated dollar demand. The RBI reference rate is the daily benchmark used to settle contracts and often attracts concentrated dollar buying or selling.
“Exporters to sell the upticks (on USD/INR) on cash/spot basis while importers to buy dollars on all dips would be suggested action for the day,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
Global markets await a crucial U.S. jobs report and a Supreme Court ruling on the legality of sweeping global tariffs.
