RBI sells dollars through PSBs to support rupee, say dealers

MUMBAI: A steep fall in the local currency value today prompted the Reserve Bank to sell dollars through state-owned banks, dealers said.

"The central bank's intervention was visible in the market today. This was mainly meant to manage the excess volatility in the market," Development Credit Bank's Associate Vice-President, Treasury, Navin Raghuvanshi, told PTI here.

The Rupee was trading at an 18-month low at 43.72/73 against the US Dollar early today. "The RBI is attempting to support the Rupee and prevent it falling below the 44 mark against the USD. If it continues to sell US Dollars, I expect the local currency appreciate to 43 in the medium-term," Raghuvanshi said.

The Reserve Bank has been selling dollars in the spot market and purchasing in the forward market to manage day-to-day liquidity conditions in the system.

Given the current market conditions, the Rupee is likely to stabilise in the range of 42-43 against the USD in the next six months, dealers said.

The home currency has depreciated by close to 11 per cent against the US dollar since January this year. Rupee today ended the day at 43.70/71 per dollar.