India's Crypto Shift: Dumping US Dollars to Protect the Rupee?

• Record High in USD vs INR Trade Causes Concern for Reserve Bank of India
• RBI Takes Steps to Minimise Rupee Loss
• Market Intervention to Protect the Rupee
• Past Instances of Market Intervention
• Global Conditions May Add Pressure on Rupee
• US Dollar Showing Global Strength

Record High in USD vs INR Trade Causes Concern for Reserve Bank of India

On Monday, the USD vs INR trade hit an unprecedented high of 83.40, stirring anxiety within the Reserve Bank of India (RBI). In response, India, a member of BRICS, is suspected of unloading US dollars in the currency markets in an attempt to lessen the impact on the Rupee.

RBI Takes Steps to Minimise Rupee Loss

The Central Bank is proactively working to mitigate losses in the Rupee, selling off US dollars to prevent the currency from depreciating further. This action comes in the face of numerous Asian currencies experiencing a decline, while the Rupee achieved a minor upturn in the charts, attributed to market intervention. Traders speaking with Reuters on the promise of anonymity stated that the RBI is engaging in market intervention to stave off the Rupee's depreciation.

Market Intervention to Protect the Rupee

A foreign exchange trader suggested that India's Central Bank will likely continue to protect the Rupee at these levels. This approach aids the Rupee in maintaining a steady trajectory and not plummeting against the robust US dollar.

Past Instances of Market Intervention

This is not the first instance where India, a BRICS member, has faced allegations of market intervention within the currency markets. In fact, India was accused of aggressively offloading the US dollar in September of this year in order to secure the Rupee. An insider at an Indian state-run bank told Reuters that the institution had dumped U.S. dollars on international markets.

Global Conditions May Add Pressure on Rupee

The RBI is keen to keep INR from hitting a record low, but given the global conditions, the pressure may persist, said a commentator. Currently, the US dollar is trading higher than all other BRICS currencies, causing apprehension about a potential downturn. The dollar's growth persists even though BRICS has attempted to limit it by launching new de-dollarization initiatives.

US Dollar Showing Global Strength

The recent development indicates that the US dollar holds more power internationally than previously believed. If the markets rebound and reach more profitable grounds, then BRICS may struggle to control the growth of the US dollar.

Edited by Jonathan Stoker