The Reserve Bank of India (RBI) is likely intervening in both the offshore and onshore markets to shield the rupee from the fallout of investors lifting their expectations on the U.S. Federal Reserve's terminal rate, traders said on Wednesday.
The rupee has fared much better against the dollar than other emerging market currencies since the blowout U.S. jobs report on Feb. 3 raised bets of a higher-for-longer rate regime.However, the Korean won has plunged by 6% in that period, the Thai baht by 5.2%, the offshore Chinese yuan by 2.3% and the South African rand by 7%.
After that, however, it has barely budged despite U.S. data over the period further strengthening the case for hawkish monetary policy. That, traders reckon, is mainly due to the RBI's intervention. "Without the RBI, there is little doubt that the rupee would be significantly lower," a currency and rates trader at a Singapore-based hedge fund said.
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