Indian central bank likely intervenes to limit rupee's fall, traders say

India's central bank, the Reserve Bank of India (RBI), likely stepped into the foreign exchange market on Thursday to limit the rupee's slide, four traders said. The currency slipped past the 96 per dollar mark for the first time in more than a month after the latest signals from the U.S. Federal Reserve sharpened expectations of dollar strength. Traders said the RBI's moves were aimed at damping excessive volatility rather than signaling a policy shift, with authorities possibly selling dollars or providing liquidity to ease upward pressure on the rupee. The development comes as markets weigh the Fed's policy path, global risk sentiment, and India's own inflation and growth dynamics. Market participants emphasised that RBI intervention is a routine tool used to smooth short‑term movements in the currency, and the central bank has typically sought to defend an orderly market while allowing a measured depreciation based on fundamentals. The rupee's weakness underscores the challenge of balancing exporters' and importers' interests amid a backdrop of elevated energy costs and persistent dollar strength. Analysts said the intervention, if confirmed, would signal the RBI's readiness to shield the currency from sharp swings even as broader global conditions remain uncertain and could trigger further volatility depending on U.S. data, oil prices, and risk appetite. The RBI's action underscores the ongoing FX management in a volatile global backdrop.