The USD vs INR trade reached an all-time high of 83.40 on Monday, making the Reserve Bank of India (RBI) much worried. BRICS member India most likely dumped US dollars in the currency markets to limit the damage done to the Rupee. The Central Bank is looking to curb losses in the Rupee and sold US dollars to keep it from falling further. While the majority of Asian currencies dipped, the Rupee managed to slightly rise in the charts due to the market intervention.
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The RBI is indulging in market intervention to limit the Rupee’s fall, said four traders to Reuters on the condition of anonymity. India’s Central Bank is most likely to “keep protecting,” the Rupee at these levels, said a foreign exchange trader. The move helps the Rupee to maintain a steady pace and not dip against the strong US dollar.
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BRICS: India Indulging in Market Intervention To Protect Rupee Against the US Dollar
This isn’t the first time that BRICS member India has been accused of market intervention in the currency markets. BRICS country India is accused of aggressively dumping the US dollar in September this year to safeguard the Rupee. Insiders told Reuters that an Indian state-run bank dumped U.S. dollars in the international markets.
“The RBI seems determined to keep INR away from a record low, but given global conditions, the pressure may persist,” he said. The US dollar is trading above all BRICS currencies and the alliance is worried about their downturn. The dollar’s rise comes even after BRICS tried to contain its growth by launching new de-dollarization initiatives.
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The current development shows that the US dollar has more strength globally than previously thought. If the markets recover and reach greener pastures, then BRICS might find it hard to stop the US dollar’s growth.