The Indian rupee saw sharp swings after the Reserve Bank of India (NSE:BOI) (RBI) made an unexpected and aggressive move in the foreign exchange market, Reuters reported.
The intervention drove rupee option volumes higher than those of the Australian dollar and to more than twice the levels of Swiss franc options, according to the Depository Trust and Clearing Corporation.
The RBI stepped in on Monday to prevent the rupee from slipping beyond the 88 mark against the U.S. dollar. A second intervention on Tuesday helped the currency recover, briefly pushing it past 86.50 on Wednesday. This week’s trading range, from 86.46 to 87.95, is the widest in at least two years.
Rupee options trading has remained active, fueled by growing bearish sentiment on the currency. A Singapore-based bank trader noted increased confidence among investors betting on further declines. Concerns include weak economic growth, an expected RBI rate cut, and foreign investors pulling out of Indian equities. Speculation over U.S. President Donald Trump’s trade policies has also driven short positions on the rupee.
Despite these pressures and a jump in U.S. yields after strong inflation data, the rupee held steady. It closed at 86.88 against the dollar, showing little movement from the previous day. The currency, along with its Asian peers, remained largely unaffected by U.S. economic indicators.
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