Forex▲ Bullish
RBI Intervention shields rupee in face of oil, hedging strain
The RBI sold dollars via sell-buy swaps as crude climbed and NDF maturities created dollar demand. Oil's rise widens India's import bill, threatening the current account.
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The Reserve Bank of India stepped into the spot market Wednesday, selling dollars through sell-buy swaps to slow the rupee's slide, two traders familiar with the transactions said. The intervention came as crude oil prices extended their rally to a three-month high and a batch of maturing non-deliverable forward contracts created a wave of dollar demand.
Crude accounts for roughly a quarter of India's import bill. Each $10 per barrel rise adds about $15 billion to the annual oil-import cost, according to a 2023 RBI working paper. The central bank's swap operation absorbs rupee liquidity without permanently draining foreign-exchange reserves, the traders said.