Rupee Hits Six‑Month High as RBI Targets Speculation

The rupee jumped 95 paise to close at 95.78 per dollar on Monday, marking its biggest one‑day gain in more than six months after the RBI rolled out a package of anti‑speculation measures. The currency was the strongest among Asian peers, analysts said.

Market Move

A pullback in crude oil, helped by expectations of better supply, lifted sentiment. Yet weaker domestic equities and continued foreign fund outflows kept the rise modest. The BSE Sensex fell 0.76% to 71,924.68 and the NSE Nifty slipped 0.70% to 22,363.35. The 10‑year bond yield rose to a three‑year high, adding pressure.

RBI Measures

On Oct 10 the central bank tightened rules on rupee derivatives. It barred rebooking of cancelled contracts, lowered the exposure threshold for transactions, tightened documentation and created a Foreign Exchange Risk Reserve. The moves aim to curb speculative dollar buying and improve market discipline. Vinod Nair noted that a special window for oil marketers’ dollar needs and tighter hedging norms also eased pressure. Banking stocks fell after the RBI raised the daily cash reserve ratio to soak up excess liquidity. Analysts expect the measures to ease spot‑market pressure but say lasting recovery will hinge on foreign institutional inflows, oil prices and global dollar trends. Jateen Trivedi said the steps should support the rupee in the near term.

Context

Forex reserves dropped $12.95 billion to $734.60 billion in the week to Oct 2, while the FCNR scheme attracted more than $143 billion of inflows. Middle‑East tensions, especially Houthi attacks on Saudi energy assets, continue to keep oil prices volatile.