RBI deploys US$2.8b in reserves to strengthen rupee defence

Mumbai

INDIAN central bank governor Raghuram Rajan oversaw the biggest jump in currency reserves among major developing nations and he is not afraid to use them to help the rupee.

In a sign of intervention, the holdings fell US$2.8 billion in the two weeks ended Jan 8 to US$326.4 billion. Mr Rajan may spend up to US$20 billion in 2016 to anchor the rupee around 65 per US dollar, according to Bank of America Merrill Lynch estimates. A survey of strategists by Bloomberg sees the currency holding steady this quarter, while options signal just a 36 per cent chance that it will breach the record low of 68.845 per US dollar by March 31.