Amid the falling Indian Rupee, the Reserve Bank of India (RBI) came into play with all the available options to stabilise the falling currency against the US Dollar.
The RBI will conduct a $5 billion USD-INR buy and sell swap auction on May 26 to inject long-term liquidity into the banking system. The swap is a simple a buy/sell foreign exchange swap from the Central side.
Under the arrangement, a retail bank can sell US dollars to the Reserve Bank and simultaneously agree to buy the same amount of US dollars at the end of the swap period.
India’s foreign exchange reserves have declined by nearly $38 billion since the outbreak of the Iran War.
Furthermore, reports indicate the RBI has held a series of internal meetings to discuss possible actions to curb the falling rupee. Options for raising interest rates are also being explored.
The RBI is also aiming to deploy aggressive Forex Market Intervention with measures like heavy pre-market dollar sales and liquidity tightening to curb excessive volatility.
To stabilize the Indian Rupee (INR) during its recent slide to record lows near 97 per dollar, the Reserve Bank of India (RBI) is deploying aggressive Forex Market Intervention. Measures include heavy pre-market dollar sales and liquidity tightening to curb excessive volatility
Rising crude oil prices are also adding to the worries regarding the Indian Rupee.
On Thursday, the Rupee staged a comeback in early trading, gaining 61 paise to trade at 96.25 against the US dollar.