Weighed down by negative market sentiment, the Indian rupee hit an all-time low of 74.50 against the US dollar before recovering to 74.38. Previously, the domestic currency had hit a low of 74.48 in October 2018 when crude oil prices crossed $80 a barrel.
On Thursday, state banks stepped in to sell dollars on behalf of RBI (Reserve Bank of India) after the rupee hit an intraday low of 74.33/dollar. The central bank announced USD/INR Sell Buy Swaps.
"On a review of current financial market conditions and taking into consideration the requirement of US Dollars in the market, it has been decided to undertake 6-month US Dollar sell/buy swaps to provide liquidity to the foreign exchange market. The swaps will be conducted through the auction route in multiple tranches," the RBI said in a statement.
The first tranche will be conducted on 16 March for an amount of $2 billion.
"The Reserve Bank of India is closely and continuously monitoring the rapidly evolving global situation and spillovers. It stands ready to take all necessary measures to ensure that the effects of the COVID-19 pandemic on the Indian economy are mitigated, and financial markets and institutions in India continue to function normally. The level of forex reserves at USD 487.24 billion as on March 6, 2020 remains comfortable to meet any exigency," the Central Bank assured.