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The Indian rupee steadied even as most emerging Asian currencies fell, with traders citing central bank intervention to avoid adverse headlines ahead of the prestigious Group-of-20 summit in New Delhi this week. Bonds rose.
The rupee was little changed at 83.1750 per dollar on Thursday, hovering near its record low of 83.2912 touched in October. Bonds outperformed most Asian peers amid reports the central bank is seeking feedback from market participants on settling rupee-denominated notes via Euroclear.
“Market participants are expecting the central bank’s intervention ahead of the G-20 meeting,” said Dilip Parmar, an analyst at HDFC Securities. “It’s a psychological thing as news or stories on life low in the rupee before G-20 may not look good.”
The currency is down about 0.5% this month, weighed by higher oil prices and a stronger dollar, and may hit an all-time low anytime if the Reserve Bank of India relents.
To be sure, the RBI has intervened in recent weeks when the rupee headed toward a record low. “The RBI is always there in the market,” Governor Shaktikanta Das said last month, referring to its forex operations. “With $600 billion reserves we are far better placed today to deal with any situation.”
--With assistance from Ronojoy Mazumdar.
