RBI may take further measures to curb rupee volatility: FM Sitharaman

Finance Minister Nirmala Sitharaman stated on Tuesday that the Reserve Bank of India may implement additional measures to control rupee volatility. During a presentation at the Bloomberg New Economy Forum in New Delhi, she emphasized the central bank's commitment to maintaining a stable rupee. The minister clarified that the RBI's efforts are not aimed at fixing the currency's value but rather at mitigating volatility.

She highlighted that the rupee's depreciation over the past year has been substantial, with most of the decline attributed to global challenges.

Sitharaman also touched upon ongoing discussions regarding the introduction of long-term capital gains tax and securities transaction tax. Investors are debating whether different asset classes should be subject to the same tax treatment. The Finance Minister assured that India's macroeconomic fundamentals remain robust, and investors should not be concerned about fiscal discipline.

The rupee experienced its largest single-day gain in six months on Monday following the RBI's announcement of several measures to curb dollar demand. The central bank further reinforced its support by directly intervening in the market and selling dollars. This intervention was complemented by the implementation of stricter rules for foreign-exchange hedges, requiring the deposit of funds for all such transactions, including those used to hedge banks' own assets and liabilities.

Additionally, the RBI has tightened regulations for banks offering non-deliverable foreign-exchange derivatives to clients. Lenders with units in India's International Financial Services Centre and certain primary dealers, previously permitted to provide non-deliverable rupee derivatives to non-residents for any purpose, can now offer them exclusively for hedging purposes.