Reserve Bank of India Intervenes as Rupee Breaches 96 Mark

The Reserve Bank of India intervened in the foreign exchange market on Tuesday to stabilize the rupee after the currency breached the psychologically significant 96 per US dollar mark. The rupee hit an intraday low of 96.15, driven by a firm US dollar index and a surge in crude oil prices that raised concerns over imported inflation.

Following the central bank's intervention, the rupee recovered to close steady between 95.94 and 95.95. This action is part of a broader effort by the central bank to prevent the currency from trading past 96 since early September. These efforts have come at a cost, with foreign exchange reserves declining by $14.9 billion for the week ending September 18.

To support the currency following a record low of 96.96 in late May, Indian banks have attracted $144 billion since early June, largely through foreign currency non-resident bank deposits. While hopes for Qatar-mediated negotiations between the United States and Iran provided some support, gains remained limited by rising US Treasury yields and strong dollar demand from local importers.