FX.co ★ Rupee Steady on RBI Support, Importer Demand

The Indian rupee hovered around 95.5 per dollar, trading in a narrow band throughout the week as persistent Reserve Bank of India (RBI) intervention and steady dollar demand from importers kept the currency stable. The rupee moved between 95.40 and 95.75, with importer buying interest underpinning the lower end of the range and RBI actions curbing any significant downside. Higher oil prices, near $90 a barrel, have been largely absorbed by the market, while the US dollar held close to a one-week high ahead of Federal Reserve Chair Kevin Warsh’s closely watched speech at Jackson Hole. In a bid to better manage an influx of dollar liquidity, the RBI also granted banks greater flexibility to swap dollars raised through FCNR(B) deposits, permitting transactions above $100 million outside the usual weekly window. The special deposit scheme has drawn more than $65 billion ahead of its August 31 deadline, bolstering the RBI’s capacity to manage volatility in the rupee.