Traders are questioning why the Reserve Bank of India (RBI) is defending the rupee despite low volatility and the currency’s resilience against the rising US rates. Analysts speculate that the RBI may be using its large foreign-reserve stockpile to control imported inflation, or intervening to prevent sentiment-driven moves. The RBI’s defense of the rupee could be motivated by the need to attract foreign investors and prevent complacency among importers.
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