The Indian rupee (INR) is teetering on the brink of a record low, currently at 83.2025 against the U.S. dollar, down from the day’s opening rate of 83.09. Just a fraction away from its all-time low of 83.29, six traders have informed that the Indian central bank, the Reserve Bank of India (RBI), appears to be actively selling dollars through public sector banks.
The dollar effect
Traders have reported the presence of public sector banks as significant sellers of dollars, suggesting that they may be acting as agents for the RBI. The central bank seems to be intervening by offering dollars at various price points rather than adhering to a specific exchange rate.
Despite the RBI’s efforts to support the rupee, concerns persist about the currency’s potential further decline. Escalating oil prices and a strengthening dollar index have raised worries among analysts about the INR’s stability. Brent crude oil has surged 8.5% in the current month and nearly 26% during the quarter, primarily driven by supply concerns.
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The rising cost of oil could widen India’s trade deficit, which reached a 10-month high of $24.2 billion in August. This deficit could have a cascading impact on the country’s overall economic balance, making the central bank’s actions crucial in stabilizing the INR and safeguarding the nation’s financial stability.
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