How the RBI’s six forex measures aim to steady the rupee (opens the source in a new tab)
- Since Saturday the RBI has taken six steps to lift the rupee to what Governor Sanjay Malhotra calls its “correct” value; the currency has recovered about 150 paise in two days to 95.28 a dollar.
- Banks must now hold a 20% cash reserve against forex derivative contracts above $2m, trading limits drop to $5m from $100m, and cancelled contracts cannot be rebooked. Importers’ hedging costs rise by at least 150 Basis point One hundredth of a percentage point: 100 basis points = 1%..
- The RBI will also supply dollars directly to three state-run fuel retailers for now. Economists call this tactical, and say defending the rupee is costly without wider reform.
- 95.28
- rupees per dollar now
- 20%
- reserve on hedges above $2m
Why it matters Importers feel this first: hedging gets dearer and speculation harder, while the RBI spends its dollars to buy time for the rupee.
Watch next Whether the rupee holds its gains once the temporary oil-retailer dollar window closes, and whether economists’ calls for broader reform and more flexible rates gain ground.