Rupee forward premiums decline on RBI swap expectations
Rupee forward premiums fell as traders speculated that the central bank may conduct a dollar swap. The rupee hit a record low of 92.4250 per dollar today.
Market participants in India are increasingly betting that the central bank will conduct a significant foreign exchange swap following extensive interventions to stabilize the local currency. According to banking sources, the Reserve Bank of India (RBI) may opt for a three-year, $10 billion buy-sell swap to offset the liquidity drain caused by its recent activities in the spot and forward markets. The U.S. dollar / Indian rupee exchange rate reached a historic low of 92.4250 on Friday, reflecting a 1.5% decline since late February. This downward pressure, exacerbated by rising oil prices linked to Middle East tensions, has forced the RBI to intervene across spot, non-deliverable forwards, and futures markets.
