RBI Steps In Aggressively to Defend Rupee, Mirroring February Intervention
The Reserve Bank of India (RBI) intervened heavily in the foreign exchange market on Wednesday to support the weakening rupee, traders said, describing the move as reminiscent of the central bank’s decisive action earlier in February. The RBI began selling dollars through state-run banks even before the 9:00 a.m. market opening, signalling its intent to curb further depreciation and reassert control over the currency’s trajectory.
The rupee opened stronger at 88.26 per U.S. dollar compared to Tuesday’s close of 88.7975 — just shy of its all-time low of 88.80. The RBI’s intervention triggered stop-loss orders on long dollar positions, fueling momentum and pushing the currency to a session high of 87.75 on the interbank system. Traders said the move was entirely RBI-led, with little participation from major flows, suggesting the central bank aimed to flush out speculative short positions against the rupee.
Market participants noted that the scale and timing of Wednesday’s intervention closely resembled the RBI’s aggressive defence earlier this year. After several sessions of quietly defending the 88.80 level, the central bank’s assertive dollar sales marked a clear shift from a passive stance to a more proactive effort to reset market positioning and restore confidence in the local currency.
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