Dollar sales of close to $5 billion by the Reserve Bank of India (RBI) prevented the rupee from crashing further in the last couple of days, analysts said. The Indian currency, which plunged to 76.23 on last Friday gained 31 paise to 75.59 on Tuesday.
On Monday, despite the Sensex plunging 1,190 points, the rupee gained by 16 paise to settle at 75.90 against the US dollar on dollar sales by banks on behalf of the RBI.
Market sources estimate that the RBI would have sold $1 billion on Monday. Moreover, when the dollar closed the 76-mark, exporters trimmed their dollar holdings. “Had the RBI not intervened, the rupee would have fallen below 77 against the dollar,” said an analyst.
“This persistent dollar selling led to the Indian currency breaching the key technical level of 75.60 which triggered stop-losses and exaggerated dollar sales by traders,” IFA Global Research said.
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