Indian rupee to extend recovery, RBI takes more steps to ease pressure

MUMBAI: The Indian rupee is set to build on its recovery at Tuesday’s open after the Reserve ​Bank of India announced more measures to alleviate ‌pressure on the currency.

The Indian rupee is expected to open in the 95.50 to 95.60 range, per traders, having rallied 1% to settle ​at 95.77 to the dollar on Monday.

The rupee’s biggest ​single-advance in six months came after the RBI ⁠unveiled a series of measures to curb dollar demand.

The ​central bank reinforced that with direct market intervention, selling dollars ​to support the currency, according to traders.

The RBI has since taken further steps, widening the scope of a recently introduced cash deposit requirement ​for foreign-exchange hedges to cover all such transactions, including ​those used to hedge banks’ own assets and liabilities.

The central bank has ‌further ⁠tightened rules for banks offering non-deliverable foreign-exchange derivatives to clients.

Lenders with units in India’s International Financial Services Centre and certain primary dealers, which were allowed to offer non-deliverable rupee ​derivatives to non-residents ​for any ⁠purpose, can now offer them only for hedging, the RBI said.

“The RBI is making its ​intentions clear in trying to push the ​rupee higher. ⁠Whether such forceful measures will ultimately deliver the desired outcome is another question,” a senior treasury official at a bank ⁠said.

The ​RBI can change the near-term dynamics, ​however, if the underlying pressures remain in place, these measures may not prove ​effective, he said.