RBI is likely selling dollars to limit the rupee's losses, according to traders

Episodes of this kind have historically been about pacing the adjustment and managing imported-inflation pass-through, not holding a line, so the practical question is whether this is routine smoothing of a broad dollar move or a heavier defence tied to capital outflows, the latter being where forward premia and onshore-offshore spreads have tended to widen. Traders' attribution is itself worth noting: intervention of this sort is rarely confirmed in real time and is typically inferred from bank flow, with the official data arriving only with a lag in the RBI's monthly statistics. The follow-ons are the scale and persistence of the selling, any drawdown visible in reserves data, and whether forward book operations accompany spot sales, which has been the tell for a more extended defence in past episodes. Whether the trigger is broad dollar strength or India-specific flow determines how long the pattern runs.