Bank of India Sells Dollar to Support Rupee Amid Dollar Strength and Fed Rate Hike Predictions

The Reserve Bank of India (RBI) has intervened in the foreign exchange market through its state-owned banks, selling dollars to prevent the rupee from falling below the 83 level against the dollar. The move comes amid pressure on the rupee due to the strength of the US dollar and predictions that the Federal Reserve (Fed) will accelerate interest rate hikes to curb inflation.

The RBI’s intervention has had a positive impact on the rupee, which rose to 82.90 against the dollar after touching 82.9475 earlier. This selling pressure has also caused the rupee to outperform other Asian currencies, with the South Korean won and Malaysian ringgit falling 1 percent, and the Thai baht shedding 0.5 percent.

The RBI’s move to sell dollars is aimed at supporting the rupee and preventing further depreciation. This is important for India, as a weaker rupee can lead to higher inflation and a slowdown in economic growth. The RBI’s intervention in the foreign exchange market is a common practice to manage currency fluctuations and maintain stability.

The recent strength of the US dollar has put pressure on many emerging market currencies, including the rupee. The Fed’s signal to accelerate interest rate hikes has added to this pressure. However, the RBI’s intervention has provided some relief to the rupee and may help to stabilize it in the short term.

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