Finance Minister Nirmala Sitharaman clarified on 13 October that the Reserve Bank of India's interventions in the currency market are directed at smoothing out fluctuations rather than pegging the rupee at any particular level, with the minister noting that ongoing external pressures on the currency would be met by continued central bank action aimed at maintaining orderly conditions. Her remarks were made at the Bloomberg New Economy Forum, held in the national capital.
Citing central bank steps announced two days prior, the finance minister noted that the rupee had held its value and may have gained ground, adding that such efforts from the RBI were expected to continue. The position put forward was that the rupee should be left to move without intervention. Letting the rupee find its own level through market forces would represent a positive development, she indicated to reporters.
Intervention by the Reserve Bank of India — targeting a pullback in dollar demand and a reduction of outsized positions held across the foreign exchange market — pushed the rupee 82 paise higher, with the currency reaching 94.96 against the dollar in Tuesday's opening trade, news agencies said. Trading in the rupee at the interbank foreign exchange market began at 95.53 before the currency climbed, with the unit ultimately posting an 82-paise advance against its prior settlement rate, touching a level of 94.96.
Currency market participants indicated that a cluster of policy interventions — among them a ring-fenced dollar channel for oil importers routed through designated banks, alongside steeper costs attached to certain rupee-hedging instruments — were anticipated to draw down demand for dollars in the open market while also limiting speculative bets positioned against the rupee.
The rupee posted a 93-paise advance on Monday — its steepest one-day rise in over half a year — finishing at 84.57 against the dollar. CR Forex Advisors managing director Amit Pabari indicated that RBI intervention was likely to pull the USD/INR rate toward the 85.00–84.80 band in the near term.
New foreign-exchange derivative rules took effect on Saturday under the Reserve Bank of India, with banks now required to hold a 20 per cent reserve against dollar purchases exceeding USD 2 million, a measure aimed at reducing speculative positioning in the currency market. Under the same directive, licensed dealers are barred from allowing any previously cancelled foreign exchange derivative contract tied to the INR — whether settled through physical delivery or handled offshore on a non-deliverable basis — to be rebooked by users.
At 102.43, the dollar index — a measure of the US currency's performance relative to a basket of six peers — had slipped 0.15 per cent.
On the slide in the rupee's value over the preceding eighteen months — a stretch Sitharaman attributed largely to pressures originating beyond India's borders — the finance minister told those present that the government remained focused on keeping the country's underlying economic conditions on a stable footing. Rupee exchange-rate movements would remain a focus of central bank action, the finance minister indicated. The finance minister drew a distinction between protecting the country's broader economic foundations and the central bank's currency operations, noting that the latter were directed at smoothing out undue market swings rather than holding the rupee to any particular target rate.
In futures markets, Brent crude — the benchmark against which global oil prices are measured — changed hands at USD 105.47 per barrel, reflecting a decline of 1.11 per cent. Gains of 305 points carried the Sensex to a closing level of 72,224.15, and the Nifty added 93.40 points to settle at 22,458.50. Net equity disposals by foreign institutional investors totalled ₹1,708.48 crore on Monday, with stock exchange records confirming the figure.
Government data published on Monday placed the consumer price index at 5.54 per cent for September, with elevated costs for onions and broader food categories driving the uptick — a reading that stayed within the tolerance band set by the Reserve Bank of India. Data from the National Statistics Office placed the CPI-based headline inflation rate at 4.83 per cent for August.
Sitharaman went on to defend the central government's approach to managing public finances, describing fiscal deficit control as a matter the Prime Minister treats as a personal priority. Sitharaman told investors that budget restraint had been upheld throughout the prime minister's tenure — including during his time as chief minister — without drawing down spending on health or education, and that this track record gave no grounds for concern on the fiscal front.
