The Indian rupee was nearly flat on Wednesday after likely intervention from the Reserve Bank of India helped the currency avert a fall to an all-time low, traders said.
The rupee was at 83.56 against the U.S. dollar as of 10:00 a.m. IST, barely changed from its close of 83.5650 in the previous session.
The RBI likely intervened in the non-deliverable forwards (NDF) market, before the local spot market opened at 09:00 a.m. IST, to support the rupee, traders said.
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Routine interventions by the RBI, including in the NDF market, have supported the currency over recent trading sessions.
The RBI’s interventions in the NDF market have “undergone a change… We are now very clear and explicit that the RBI is there in the forward market,” RBI Governor Shaktikanta Das said on Friday during a post-monetary policy press conference.
The central bank has changed tactics in the way it seeks to limit rupee volatility, with the use of non-deliverable forwards now overtaking spot market interventions, Reuters reported earlier.
Dollar bids from local oil companies are present but the currency is likely to stay in a narrow range now that the RBI has “signalled to the market” that it will prevent further weakness, a foreign exchange trader at a state-run bank said.
The dollar index was at 105.3 while Asian currencies were mostly rangebound, with investors awaiting the release of key U.S. consumer inflation data and the Federal Reserve’s policy decision due later in the day.
The Fed is expected to keep rates unchanged but policymakers will put out their new interest rate projections.
“Asia FX could thus face volatility from a potential upward shift in the Fed’s median dot plot, which could push US yields and the US dollar higher,” Lloyd Chan, senior currency analyst at MUFG Bank said in a note.