The Reserve Bank of India was likely selling dollars on Tuesday to support the rupee, which was hit by weak global risk appetite and dollar bids due to maturity of positions in the non-deliverable forwards (NDF) market, five traders told Reuters.
The rupee was at 87.2850 against the U.S. dollar as of 11:30 a.m. IST, up slightly on the day. It fell to 87.3850 earlier in the session.
State-run banks were spotted offering dollars near 87.30 levels, most likely on behalf of the RBI, traders said.
Stay up to date with the latest news. Follow KT on WhatsApp Channels.
It “seems like they will be active till the mid-day fixing window, post which it (USD/INR) could move higher”, a trader at a bank said.
Maturity of NDF positions typically heightens demand to buy dollars at the daily reference rate, which exerts pressure on the rupee.
The dollar index has fallen more than 3% in March so far.
“Tariff delays and exemptions could also remain a drag on the U.S. dollar, with President (Donald) Trump flip-flopping with his tariff policies,” MUFG Bank said in a note.
In an interview on Sunday, Trump declined to predict whether the U.S. could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China.
U.S. tariffs of 25% on imports of steel and aluminium will take effect on Wednesday and investors await the announcement of reciprocal tariffs in early April.
