RBI’s Intervention and Greenback Shortage

• The rupee fell sharply to its lifetime intraday low of 85.80, marking the steepest fall in almost two years.

• The Reserve Bank of India’s stance to hold on to dollar payments in short-term forward contracts contributed to the greenback shortage.

• Importers rushed to meet their month-end payment obligations, causing the rupee to drop.

• Despite strong domestic equity markets, the rupee was impacted by sustained outflow of foreign funds and rising crude oil prices.

• Rising U.S. bond yields and dollar’s attractiveness also contributed to the dip.