The central bank has responded with restrictions on currency derivatives and a special dollar supply facility for oil marketing companies, but these measures have yet to change the underlying pressures on the rupee. The sustainability of intervention is becoming a concern as foreign exchange reserves decline and the cost of supporting the currency rises.
Mumbai, Sep 27 (IANS) Inflows into non-resident Indian (NRI) deposit schemes witnessed a sharp rise during the first four months of FY27, driven largely by strong growth in foreign currency deposits following a special policy measure introduced by the Reserve Bank of India (RBI).
RBI has deployed an estimated $75 billion to $80 billion defending the rupee since June; forex reserves fell to $721 billion by October 16.
Ambit Capital warns that declining usable reserves and $200 billion in forward dollar liabilities constrain the defence.
Derivative curbs and direct dollar supplies to oil companies have eased market pressure but not underlying demand.
High oil prices and capital outflows could prolong the pressure, forcing the RBI to allow greater rupee depreciation.
The Reserve Bank of India ( RBI ) is facing mounting pressure to defend the rupee, having deployed an estimated $75 billion to $80 billion through dollar sales and currency swaps since June, as rising oil prices, foreign capital outflows and a large forward dollar position complicate its efforts to stabilise the currency. Advt
The central bank has responded with restrictions on currency derivatives and a special dollar supply facility for oil marketing companies, but these measures have yet to change the underlying pressures on the rupee.
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