RBI steps in to support rupee as forex reserves dip $52bn in a month
The Reserve Bank of India has implemented new measures to stabilize the rupee, including direct dollar sales to oil companies and stricter derivative trading rules. These actions follow a significant $52 billion drop in forex reserves and increased pressure from global market volatility.
Why it matters
These interventions are crucial for maintaining currency stability and managing the economic impact of rising crude oil prices and foreign capital outflows.
MUMBAI: With forex reserves dipping almost $52 billion from $785.7 billion on Sept 4 to $734 billion on Oct 2, Reserve Bank of India Saturday announced a slew of measures to prevent unidirectional bets against the rupee and reduce demand for dollars.RBI said it would sell dollars directly to IndianOil, HPCL and BPCL to meet their crude import needs, as part of measures to curb rupee volatility. It also imposed a 20% Foreign Exchange Risk Reserve on banks for dollar purchases exceeding $2 million. Further, banks must seek additional documentation of underlying exposure before extending rupee derivative contracts to clients.The rupee's decline was stemmed by a record $127 billion mobilisation of FCNR(B) deposits.
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