MUMBAI (Reuters) – The Reserve Bank of India was likely selling dollars on Tuesday to support the rupee, which was hit by weak global risk appetite and dollar bids due to maturity of positions in the non-deliverable forwards (NDF) market, five traders told Reuters.
The rupee was at 87.2850 against the U.S. dollar as of 11:30 a.m. IST, up slightly on the day. It fell to 87.3850 earlier in the session.
State-run banks were spotted offering dollars near 87.30 levels, most likely on behalf of the RBI, traders said.
It “seems like they will be active till the mid-day fixing window, post which it (USD/INR) could move higher”, a trader at a bank said.
Maturity of NDF positions typically heightens demand to buy dollars at the daily reference rate, which exerts pressure on the rupee.
The dollar index was little changed at 103.9 while Asian currencies were mostly lower on Tuesday.
(Reporting by Jaspreet Kalra, Dharamraj Dhutia; Editing by Mrigank Dhaniwala)
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