Rupee bears crushed by RBI as shorts squeezed

Ten months into his tenure, India's central bank head Sanjay Malhotra has sent a clear signal to currency traders: the rupee can move a little more freely, but speculators risk getting crushed.

- Bloomberg

The currency rallied nearly 1% on Wednesday after the Reserve Bank of India waded into both offshore and onshore markets, forcing traders to scramble to cover their short bets. The intervention has effectively ended talk about the rupee breaching its all-time weak point near ₹88.80 per dollar. It was trading around ₹87.93 on Thursday.

With the rupee under pressure from US trade tensions and foreign outflows, the RBI's action signals it will allow some flexibility but step in when needed, traders said. With a growing economy, low inflation, and $700 billion in reserves, the central bank has both the firepower - and the resolve - to fend off those it calls speculators.