India accused of dumping US dollars to keep the rupee from falling

BRICS member India is accused for the third time in a year of dumping US dollars to prevent the rupee from falling. The US dollar hit the Indian rupee, sending it to an all-time low of 83.61 this week. However, the rupee managed to reverse course after briefly rising against the US dollar to reach 83.50.

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The rise in the rupee, insiders say, is not natural and may have involved “players” to prevent it from falling. The players in question could be the Reserve Bank of India (RBI), which helped prevent the rupee from collapsing against the US dollar. BRICS members India, China and Russia have previously been called out for interfering in currency markets.

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BRICS: India Could Have Dumped US Dollars to Halt Rupee’s Fall

The BRICS countries intervened in the foreign exchange market by selling US dollars to keep their local currencies afloat. The Reserve Bank of India probably dumped US dollars into the foreign exchange market to stem the rupee’s loss. A currency insider told Reuters on condition of anonymity that the RBI probably stepped in to save the rupee from the US dollar. “Like yesterday, they (state-run banks) are again constantly on offer,” said a senior trader at a private sector bank.

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The Indian rupee faces stiff competition from the rising US dollar, sending the local currency to new lows. The decline in local currencies comes at a time when BRICS is trying to end its reliance on the US dollar. Read here to find out how many US sectors will be affected if BRICS ditches the dollar for trade.

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Despite threats of de-dollarization from the BRICS countries, the US dollar remains strong against all local currencies. Indian rupee, Chinese yuan and Japanese yen fail to block the US dollar in the foreign exchange market.