Indian rupee to extend recovery, RBI takes more steps to ease pressure

Mumbai: The Indian rupee appears poised for further improvement following fresh measures by the Reserve Bank of India (RBI) aimed at ebbing pressure on the currency. Traders anticipate the rupee to open within the range of 95.50 to 95.60 against the dollar, following a 1% gain that pushed it to 95.77 per dollar on Monday. The rupee's most significant single-day advance in six months was triggered by the RBI's announcement of a series of steps to curb demand for dollars.

The central bank has bolstered this stance with direct market intervention, selling dollars to bolster the currency's value, sources say.

The RBI has since broadened the application of a recently introduced mandate for foreign-exchange hedges, extending it to encompass all transactions, including those utilized for hedging banks' own assets and liabilities. Additionally, the central bank has tightened regulations governing banks' offering of non-deliverable foreign-exchange derivatives to clients.

Lenders with units in India's International Financial Services Centre and certain primary dealers, previously permitted to sell non-deliverable rupee derivatives to non-residents for any purpose, are now restricted to offering them solely for hedging purposes, the RBI announced. A senior treasury official from a bank commented, "The RBI is unmistakably signaling its intent to propel the rupee upwards. However, the success of these forceful measures in achieving the desired result remains uncertain."