Rupee shielded by central bank intervention even as pressure lingers

Core Viewpoint - The Indian rupee closed at 88.69 against the U.S. dollar, nearing its all-time low, with the Reserve Bank of India (RBI) likely intervening to support the currency amid increasing dollar strength and concerns over U.S. tariffs and visa fee hikes [1][7]. Currency Market Dynamics - The RBI's intervention was noted across various segments, including non-deliverable forwards (NDF), currency futures, and the OTC spot market, which helped to stabilize the rupee despite ongoing pressures [2][7]. - A trader indicated that the RBI's presence led to muted price action, although the rupee's trajectory appears to lean towards further weakening [2][7]. Central Bank Strategy - The RBI has increased its activity in the offshore NDF market to support the rupee, allowing for a gradual weakening while selectively intervening to manage volatility rather than maintaining a fixed exchange rate [5][7]. - Abhishek Goenka from IFA Global noted that the RBI's approach is to smooth out volatility rather than defend a specific level for the rupee [5]. Economic Influences - Dollar demand related to gold imports and concerns over the H-1B visa fee hike have contributed to the pressure on the rupee [6][7]. - The dollar gained 0.3% against a basket of peers, while India's benchmark 10-year bond yield increased to 6.486% [6][7].