How RBI stepped in to stabilise the rupee after five day slide
After the rupee slipped for five consecutive sessions and came under heavy pressure, the Reserve Bank of India stepped in with decisive market action. Targeted interventions helped halt the fall, restore confidence and bring stability back to the currency market.
The Indian rupee faced sustained pressure after declining for five straight trading sessions, raising concerns among traders and policymakers about excessive volatility. The fall was driven by a strong US dollar, foreign fund outflows and cautious global sentiment that weighed on emerging market currencies.
As the rupee weakened sharply, the Reserve Bank of India moved in to stabilise the situation. Market participants said the central bank sold dollars through state run banks to curb speculative pressure and smoothen sharp movements. This intervention helped check further depreciation and signalled that the RBI was closely monitoring currency trends.
Traders described the RBI’s action as timely and calibrated. Rather than defending a specific exchange rate, the central bank focused on reducing disorderly movements and restoring confidence. The intervention helped the rupee recover from intraday lows and trade in a more stable range.
Apart from dollar sales, liquidity management also played a role in calming the market. By ensuring adequate rupee liquidity, the RBI reduced panic driven demand for foreign currency. Analysts said this combination of measures sent a clear message that excessive volatility would not be allowed to persist.
The rupee’s decline over the previous sessions had been influenced by global factors including expectations of higher interest rates abroad and cautious investor positioning. Domestic factors such as importer demand for dollars also added to the pressure. However, RBI action helped offset these forces in the short term.
Currency experts said the episode highlights the central bank’s approach of intervening only when necessary while allowing market forces to determine the broader trend. The RBI’s focus remains on maintaining financial stability rather than targeting a fixed exchange rate.
Following the intervention, the rupee showed signs of stabilisation and market sentiment improved. Traders expect the currency to remain sensitive to global cues, capital flows and crude oil prices in the coming days. The RBI is expected to continue monitoring the situation closely and step in again if volatility rises sharply.
Overall, the swift response helped reassure markets and demonstrated the RBI’s readiness to act when currency movements become disruptive.
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