RBI parachute gives falling rupee a glide path to avoid 84/$ breach
Reserve Bank of India (RBI) has been carrying out a nimble balancing act over the past couple of months to ensure exchange-rate stability, supplying dollars in a broader trade deficit environment, but not allowing the rupee to breach the psychologically crucial 84 mark to a dollar.
Over the past month-and-a-half, the rupee has hit new lows versus the dollar on several occasions as speculation about a growth slowdown in the US has sparked risk aversion, weakening global investor appetite for emerging market currencies.
However, even as the domestic currency has come within a stone's throw of breaching the 84/$1 mark, it has stopped short of doing so, likely because of RBI interventions through dollar sales, traders and analysts said.
«The RBI has been doing this for about a month-and-a-half when all Asian currencies came under pressure and there was a lot of confusion about a growth slowdown in the US,» said Abheek Barua, chief economist at HDFC Bank.
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