India's RBI Said to Have Sold at Least $5 Billion to Boost Rupee
The Reserve Bank of India sold at least $5 billion worth of the US currency, one of the people said, asking not to be identified as the information is private. The RBI didn't immediately respond to an email requesting comment on the matter. If the trend persists, it could become RBI's largest month of net dollar sales since January.
The rupee fell to 87.89 per dollar last week, just shy of its all-time low as US President Donald Trump doubled tariffs on Indian goods on Aug. 6 to 50% as a penalty for its purchases of Russian oil. A weaker rupee could fuel imported inflation and strain an already fragile economic recovery.
The intervention suggests a potential shift away from the RBI's previously restrained approach under Governor Sanjay Malhotra, who took office in December.
The rupee has depreciated more than 2% so far this year, making it among Asia's worst-performing currencies. Roughly half of that drop came in the past two weeks after it became evident Trump was planning to increase the tariffs.
On multiple occasions last week, the central bank was seen stepping into the offshore market just before domestic currency trading began at 9 a.m. Mumbai time, according to two of the people familiar with the matter, who declined to be identified as they aren't authorized to speak on it.
Relying on so-called non-deliverable forwards allows the central bank to guide the rupee's trajectory without having to sell large volumes of dollars outright. The central bank heavily relied on this strategy last year.
The RBI's latest foreign-exchange reserves data also point to increased intervention, with the stockpile falling by $9.3 billion, the steepest drop since November, to $689 billion in the week through Aug. 1. Part of the decline may reflect valuation changes in global currencies, not solely the central bank's dollar sales or purchases.
--With assistance from Anup Roy.
More stories like this are available on bloomberg.com
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
27 minutes ago
- Hans India
Banks only decide on minimum a/c balance: Guv
Gozaria (Guj): Reserve Bank of India (RBI) Governor Sanjay Malhotra on Monday said banks are free to decide the minimum balance for savings accounts and that it does not fall under the regulatory domain of the RBI. He was speaking to reporters on the sidelines of a function on 'Financial Inclusion Saturation Drive' organized at Gozaria village Panchayat in Gujarat's Mehsana district. Asked about a private bank increasing the minimum balance required for savings accounts, Malhotra said: 'The RBI has left it to individual banks to decide on what minimum balance they want to set. Some banks have kept it at Rs10,000, some have kept Rs2,000 and some have exempted (customers). It is not in the regulatory domain (of RBI).' In a recent decision, private lender ICICI Bank increased the minimum balance requirement for those opening new savings accounts from August 1. The minimum average monthly balance (MAB) has been increased by five times to Rs50,000 from Rs10,000 on savings bank account, as per the lender's website. Similarly, MAB for semi-urban locations and rural locations have been increased five times to Rs25,000 and Rs10,000, respectively. Incidentally, the State Bank of India has decided not to penalise savings account holders if they do not keep minimum balance. Traditionally, public-sector banks have lower balance requirements compared to private lenders with the requirement waived for Jan Dhan accounts. Several public-sector banks have done away with the requirement, and customers who fail to maintain the minimum prescribed balance do not need to pay a penalty. Speaking at the event, Malhotra said digital literacy was very important to succeed in the new age. 'Earlier they used to say if you do not study you will not prosper. In today's age, this is the same for digital literacy. If you do not have digital literacy you will not progress,' he said.
The Hindu
27 minutes ago
- The Hindu
Will the rules-based international order survive the Trump presidency?
Recent observations on the rules-based international order have suggested that this system of interlocking governance institutions that emerged since the end of World War II, known to some as Pax Americana, might survive or thrive despite the onslaught of political and economic confrontations foisted on the world by U.S. President Donald Trump. The real question is not about its survivability per se, but rather the extent to which it might mutate under pressure from Washington's coercive policy prescriptions inflicted upon developing and emerging economies, particularly across the Asian region. A few definitional remarks are in order at this point. Firstly, the rules-based international order, a liberal paradigm seen as a remedy to the devastation wreaked by the two World Wars, was brought into existence by the U.S. This was made possible by the U.S. pushing ahead with the Marshall Plan to rebuild war-torn Europe, returning it to a minimum threshold of economic advancement and political stability that would enable the continent to support the global narrative of a unipolar world as envisioned by Washington. Thereafter, a broad set of 'norms and institutions that govern international relations as well as broad patterns of power distribution and economic flows across the world, most of it backstopped by American power and leadership' came into force, including the World Trade Organisation (WTO), the International Monetary Fund (IMF) and the World Bank (as well as the 'Washington consensus' that they implied), and a variety of related organisations. All these institutions existed to put guardrails in place for international politics — in other words these organisations were used as leverage to limit the regional and global ambitions of any potential rival to the aforementioned unipolar balance of power. The triumphs of Pax Americana The argument made by some who see the continuation of the rules-based international order even through the turbulence of the Trump years is that throughout the history of Asia's development, the U.S. has displayed the very same bullying tactics around the region that curbed and shaped the growth trajectory of Asian powerhouse economies. For example, Sandeep Bhardwaj argues that during the post-War years, when Japanese cloth imports of the U.S. outsold American domestic product, the U.S. in 1955 compelled Japan to agree to a voluntary export restriction that capped the latter's share of the U.S. market. However, the U.S. has equally nurtured the quality of openness within the rules-based order, allowing room for Asian and Latin American economies to periodically assert themselves and play a larger role within limited spaces, thus introducing the necessary element of system flexibility that has helped it endure despite a series of economic and political shocks over the past half century. Examples cited of such openness within Pax Americana include the U.S. and developed nations encouraging developing countries to join the United Nations umbrella of institutions; getting China to join the WTO in 2001 after going slow on global concerns about Beijing's human rights violations; supporting Japan's entry to the G-7 in 1973; strongly backing the entry of China, India, Indonesia, Japan, and Saudi Arabia into the G20; establishing the UN Millennium Development Goals to backstop the financing of industrialisation in emerging economies; and structural adjustment loans from the IMF. These loans, however, were a double edged sword, offering a financial lifeline for Asian countries while benefitting U.S. trade policy by forcing the opening up of these markets. The extent of U.S.' power There is no denying that the rules-based international order is far from an authoritarian hierarchy of forced policy prescriptions and expected political genuflection of so-called subordinate Asian nations. Yet, it is fair to ask whether such a warped balance of power in favour of the U.S. could ever emerge, given the Asian trajectory of rapid economic growth built on global trading and capital systems, the collective social emancipation of people, the propagation of individual and institutional liberty, and the growing state capacity for meaningful regional action and collaboration. If the sense of agency and autonomous power of Asian nation-states is overlooked, then it leads to a false sense of U.S. munificence in 'bestowing' openness and flexibility upon the rules-based order. In reality, the U.S., for all its economic heft and technological prowess had no choice but to find its own place within this complex matrix of competing nations worldwide, each strong in specific economic sectors, but perhaps less so in other areas. Within this more reasoned paradigm of the global political economy, which neither denies the unipolarity of the present moment nor overstates the U.S.'s ability to impose its hegemonic ambitions on other nations in today's multi-alliance, interconnected and interdependent framework of international engagement, it becomes clear that damage done to the rules-based liberal international order under the second Trump administration will transform the order to the point of it resembling a new order entirely. Ironically, at the heart of this act of reshaping the rules-based liberal international order, are not so much the consequences of what the U.S. is inflicting upon Asian nations but rather its abrupt pulling of the rug from under the heels of Europe by undermining the ideological cause and financial prospects of NATO and leaving the continent exposed to the risk of ever-increasing depredations of Russia. Similarly, the resoluteness with which Mr. Trump has tied his administration to the whims and fancies of the genocidal and warmongering causes of Israel's Benjamin Netanyahu will rewrite the playbook for everyone. This will impact the rulers of Saudi Arabia and Türkiye, rethinking regional political dynamics, as much as it will aspiring college students from India seeking admissions in countries other than the U.S. in the wake of compulsory social media scrutiny as a condition of visa issuance. A new order Yes, the silhouettes of the old rules-based liberal international order will continue to fall upon the new arrangements that the world will find itself forced to confront by the end of the second Trump term. However, there can be no denying that it will indeed be a new order built on the rise of bilateral agreements in place of broader regional ones. The newer order will feature the widespread use of economic sanctions to penalise political opponents across the globe in contravention of WTO norms; ever-growing skirmishes and limited wars; a reliance on drones and AI to settle territorial and other disputes; as well as a steady, catastrophic dismembering of global institutions fostering cooperation, reducing transactions costs and speaking up for human rights and standards of international engagement more broadly. Pax Americana may well give rise to the next phase of its own evolution, Flux Americana.
&w=3840&q=100)
Business Standard
27 minutes ago
- Business Standard
Asia stocks mostly on the rise as tariff truce supports sentiment
Markets have held modest ranges in recent weeks, waiting to see whether the world's two largest economies can agree on a durable trade deal or if global supply chains will again be upended Reuters SINGAPORE Most Asian stocks rose on Tuesday, buoyed by an extension of a tariff truce between the world's two largest economies, while Japanese shares hit an all-time peak, powered by tech shares after returning from a long weekend break. US President Donald Trump extended a tariff truce with China by another 90 days on Monday, staving off triple-digit duties on Chinese goods, a move that was largely expected by investors and markets. Investor sentiment in recent weeks has been supported by expectations of rate cuts by the US Federal Reserve, resilient US corporate earnings as well as clarity on US trade levies on trading partners. Japan's Nikkei climbed to a record high and was last up 2% as the country's markets reopened after a public holiday on Monday, tracking other global indices this year. Australia's benchmark index also hit a record high, ahead of a monetary policy meeting at which the central bank is widely expected to cut interest rates. That left MSCI's broadest index of Asia-Pacific shares outside Japan a tad higher. China's blue-chip stocks were flat while Hong Kong's Hang Seng index eased 0.1% in early trading. Markets have held modest ranges in recent weeks, waiting to see whether the world's two largest economies can agree on a durable trade deal or if global supply chains will again be upended by the return of steep import levies. The US-China tariff truce extension "preserves the status quo for now, so no immediate implications for investment markets," said Shane Oliver, chief economist and head of investment strategy at AMP in Sydney. The US and China have engaged in a tit-for-tat tariff duel throughout the year, culminating in trade talks in Geneva, London and Stockholm since May that focused on bringing retaliatory tariffs down from triple-digit levels. The latest truce extension clears the way for investors to focus on an action-packed week dominated by US inflation data, a central bank policy decision in Australia and the first summit between US and Russian leaders since June 2021. Traders are pricing in a 25 basis points rate cut later on Tuesday from the RBA with another cut expected by November. Investor attention will be on comments and forecasts from the central bank. "The uncertainties are around its guidance, in particular whether it still sees further scope to cut rates and whether it will remain gradual and measured," said AMP's Oliver. Globally, the spotlight will be on the release of US consumer price inflation data later on Tuesday. Economists polled by Reuters have forecast that month-on-month core CPI edged up 0.3% in July, faster than the 0.2% in the previous month. "CPI will be a key test for market tone. Softer data could give small-caps a lift, but for now, mega-caps remain firmly in control," said Marc Velan, head of investments at Lucerne Investment Management. An upside surprise on inflation may also add caution to market expectations of rate cuts by the Federal Reserve this year. Investors are currently pricing in at least two rate cuts from the Fed in 2025 while J.P. Morgan expects the Fed to deliver four successive rate cuts starting in September. In commodities, gold prices were last at $3,354, having dropped nearly 1.6% on Monday after Trump said tariffs will not be placed on imported gold bars. Oil prices were steady ahead of the August 15 meeting between Trump and Russian President Vladimir Putin, aimed at negotiating an end to the war in Ukraine. The talks follow increased US pressure on Russia, raising the prospect of penalties on Moscow if a peace deal is not reached. "The market is not pricing in significant outcomes from the meeting, but any shift in geopolitical tone could have marginal impact, particularly for commodities and certain emerging market assets," said Lucerne's Velan. Currencies were mostly calm in early trading, with the dollar steady against major peers the euro and the yen. Cryptocurrencies bitcoin and ether were a tad lower after rallying in the previous session.
