Exclusive-India cenbank asks banks to avoid large shorts as rupee nears record low, sources say

By Jaspreet Kalra and Nimesh Vora

MUMBAI (Reuters) – The Reserve Bank of India has asked state-run and private banks to refrain from betting heavily against the rupee in an effort to support the currency which has been teetering near record-low levels for the past three trading sessions, four sources said.

The RBI informally communicated the instructions to bankers via phone calls on Monday with the rupee at risk of breaching its record low of 83.9850 per U.S. dollar, the sources said.

The RBI has asked banks to avoid large bets against the rupee and the instructions are a form of “oral intervention” by the central bank, a senior banker at a private bank said.

The news has not been previously reported.

The sources declined to be identified as they are not authorised to speak to the media. The RBI did not immediately respond to a mail requesting comment. Reuters could not ascertain the full list of banks the RBI called.

The central bank steps in occasionally to support the rupee via moral suasion and had last done something similar in early August.