RBI to curb rupee volatility amid external pressures, says Finance Minister Sitharaman

Finance Minister Nirmala Sitharaman stated on Tuesday that the Indian rupee has experienced a "significant" depreciation over the past year and a half, and the Reserve Bank of India (RBI) will persist in its efforts to curb excessive volatility. At the Bloomberg New Economy Forum 2026, Sitharaman emphasized that the RBI is working to maintain stability in the domestic currency rather than attempting to fix its value.

The central bank recently implemented several measures, including the establishment of a special window for oil marketing companies to divert dollar demand away from the spot market, tightening rules for forex derivatives trades to limit speculative bets against the rupee, and requiring banks to maintain a 20% reserve for dollar purchases exceeding USD 2 million.

Sitharaman acknowledged that the rupee's value surged by one percent on Monday following these measures and further appreciated to Rs 94.96 in early trade on Tuesday. She expressed confidence that the RBI would continue to take additional steps to prevent the rupee from becoming overly volatile. Sitharaman assured that India's fundamentals are robust, with strong foreign exchange reserves, and that most of the rupee's volatility stems from external challenges.

The minister affirmed that macroeconomic fundamentals remain sound within the country, and fiscal discipline will not be a concern for investors. However, she acknowledged that managing the rupee's reaction to dollar fluctuations is the primary challenge and emphasized that the RBI will address this issue.