India’s rupee defence raises question of how far RBI will go
The Reserve Bank of India implemented strong measures to stabilise the rupee as external pressures intensify. This includes opening a dollar window for state-owned oil refiners and introducing a new reserve requirement for foreign-exchange derivatives. Analysts expect the rupee to rally but caution that sustaining those gains may be difficult due to high oil prices and foreign fund outflows.
The Reserve Bank of India (RBI) has taken strong measures to defend the Indian rupee, which has neared a record low, as external pressures mount. The latest actions include opening a dollar window for state-owned oil refiners and introducing a reserve requirement for foreign-exchange derivatives, similar to China's central bank.
These measures come after the RBI raised interest rates and signaled it is open to further monetary tightening. The rupee is expected to rally when trading resumes, with the RBI aiming to defend the 97-per-dollar level. However, sustaining gains may prove challenging due to high oil prices and overseas funds pulling out from Indian equities.
RBI Governor Sanjay Malhotra stated that the rupee is undervalued, and the central bank is willing to do whatever it takes to prevent a new record low.
Brief written by urgent.news from The Economic Times - Economy's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
