Investing.com– The Indian rupee gained sharply on Monday after the Reserve Bank of India unveiled a broad package of measures over the weekend to ease pressure on the currency, redirect dollar demand and curb speculative activity in foreign exchange markets.
The rupee’s USD/INR pair fell as much as 1.1% to 95.739 rupees, and it last traded 0.8% lower at 95.952 by 09:59 IST.
The pair had reached as high as 96.85 rupees last week, just below the all-time high of 96.96 reached in May this year.
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The RBI announced on Saturday that it would meet the entire daily dollar requirements of three state-run oil marketing companies through a special window, shifting their purchases away from the spot market. The facility covers Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
The central bank also barred companies from rebooking cancelled rupee-linked foreign exchange derivative contracts, reduced the threshold for positions without underlying exposure to $5 million from $100 million, and required banks to maintain a 20% cash reserve against certain contracts.
The measures aim to reduce immediate dollar demand and discourage hedging that has amplified depreciation pressures.
The measures came after the RBI raised its benchmark repo rate by 25 basis points to 5.5% last week, its first rate increase in nearly four years. The central bank also shifted its policy stance from “neutral” to “calibrated tightening”, citing inflation risks from higher oil prices and resilient economic growth.
The rate hike had failed to halt the rupee’s slide, highlighting pressure from elevated energy costs, foreign capital outflows, and broad dollar strength.
Original Article
Indian rupee rebounds from near record low after RBI unveils support measures
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