RBI is likely selling dollars through state-run banks to support the rupee

Selling dollars via state-run banks is the RBI's long-established intervention format: it keeps the central bank off the visible ticket while letting dealers infer size from the flow, and it is how the authority has historically managed the rupee rather than defended any specific level. The distinction worth drawing is between smoothing and resistance: the RBI's form over many such episodes has been to lean against the speed and one-sidedness of depreciation, not to hold a line, so sustained flow of this kind has typically signalled an attempt to slow a move and discourage speculative positioning rather than reverse the underlying pressure. The mechanism runs through spot USD/INR and the forward book, since intervention sterilised or unsterilised shows up in onshore liquidity, forward premia, and the gap between onshore and offshore rates, which is where the strain tends to surface first. What determines staying power in past episodes is reserves depth and the external driver: intervention has worked when the pressure is flow-driven and temporary, and has merely delayed adjustment when the cause is a broad dollar move or terms-of-trade shock. Follow-ons worth noting are the size and persistence of the reported selling, whether it extends to the forwards side, and any shift in the daily reference rate behaviour that would indicate greater tolerance for a weaker fix. As a reported rather than announced action, the signal is directional until the pattern in the data confirms it.