RBI May Pitch In To Tame Rupee's Sharp Swings Amid Geopolitical Tensions And LIC IPO

The rupee has been under pressure owing to a strong dollar and rise in crude price. In trade on February 21, 2022, the rupee traded in the range of 74.349 - 74.687 per US dollar. Further, the pressure has been created by the continuing FII outflow from the markets.

RBI May Pitch In To Tame Rupee's Sharp Swings Amid Geopolitical Tensions And LIC IPO

In early trade, rupee gained on softening crude oil price and hopes of a diplomatic solution on the Russian-Ukrainian tensions. The reports suggest that there is agreed a summit and the pre-condition for the same is that Russis will not invade Ukraine. In a statement released early Monday, the Elysee Palace said Macron had pitched both leaders on a summit over "security and strategic stability in Europe."

There are also reports that the central bank shall pitch in to settle the rupee as the biggest ever IPO is also on its way. Furthemore, while India's rupee depreciation goes good for exports, it is troublesome for getting the returns on investments assessed especially when India is going against the global central banks on interest rate decisions.

"The rupee is likely to turn volatile, losing value to the dollar amid geopolitical tensions," said Bhaskar Panda, executive vice-president, HDFC Bank. "The central bank may step in to curb any wild swings in the exchange rate ahead of the prestigious equity issuance." Life Insurance Corp of India has filed papers to sell shares in India's biggest initial public offering (IPO) to date.

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