Rupee on the Move: Market Forces or RBI’s Invisible Hand?

The Indian rupee's exchange rate is primarily determined by market forces such as supply and demand, inflation rates, and foreign investment flows. However, the Reserve Bank of India (RBI) actively intervenes to maintain orderly market conditions and curb excessive volatility. Recent aggressive interventions by the RBI have led to increased volatility and a surge in rupee option volumes. While the market sets the rupee's value, the RBI's actions play a crucial role in stabilizing the currency during turbulent times. 

 

Source: Reuters