The slump in the Indian rupee’s volatility has traders worldwide questioning when the Reserve Bank of India (RBI) will ease its control, despite a global decrease in currency volatility. The RBI’s interventions have kept the rupee in a narrow range, leading to the lowest one-month implied volatility against the dollar since 2005, Bloomberg reports.

RBI’s Role

The RBI has already added back $32 billion in reserves this year to maintain the rupee’s stability, while its dollar forward book also rose by around $10 billion in the first four months. Citigroup suggests that the central bank’s efforts may be aimed at enhancing the rupee’s appeal as an international trade currency.

Investor Sentiments

Despite the low volatility, investors remain largely positive on the rupee, driven by improved macros and India’s status as the world’s fastest-growing major economy. “India is also benefiting from the relocation of global supply chains. We see upward potential for India's growth outlook in the coming years, and are positive for the rupee,” said Guan Yi Low, head of fixed income, Asia Pacific at M&G.

See Also: Rupee’s Fall Likely To Continue In Light Of US Fed’s Rate Hike Plans

RBI’s Strategy

Analysts and investors are discussing the RBI’s currency strategy and its implications. “RBI may be ascribing the same weight to currency stability as it does to price stability and financial stability in an uncertain global environment,” said Samiran Chakraborty, India economist at Citigroup.

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