Rupee intervention, but not as you might think

The rupee is outperforming almost all other EM currencies against the US dollar this year, leading to the usual speculation that the RBI is intervening to prop up the currency. There is evidence of intervention, but this has been to prevent further appreciation amid the sustained strength of foreign portfolio inflows. A further appreciation lies in store, but the RBI's actions suggest that it will not allow big moves.

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