RBI buys dollars, halts rupee's rally

The Reserve Bank of India was suspected to be buying dollars via state-run banks to shore up its foreign exchange reserves, preventing the rupee from breaching above the psychological 60 per dollar mark, according to six dealers on Wednesday.

The partially convertible rupee was trading at 60.14/15 per dollar at 4.30 pm, after hitting as much as 60.04, its highest since July 30. The rupee closed at 60.48/49 on Monday. Two traders estimated the central bank bought nearly $1 billion in spot markets and then swapped them in forwards markets.

Image: A banker hands over money to a customer; Photograph: Reuters