RBI introduces measures to stabilize rupee as it falls near 96.96 against dollar
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims + Mains·
Exchange rate volatility and forex intervention: a key GS3 Economy topic.
Why in news
The Reserve Bank of India (RBI) introduced measures to stabilize the Indian rupee as it fell near 96.96 against the dollar despite $140 billion raised via special deposit schemes.
Background
The RBI aims to curb speculative activity and corporate demand for hedging, which may increase costs by 80-150 basis points. Oil marketing companies are now permitted to buy dollars directly from the RBI.
Facts for Prelims
- FactThe Indian rupee fell near 96.96 against the dollar as of October 2026.
- Fact$140 billion was raised via special deposit schemes to support the currency.
- FactProposed measures may increase hedging costs by 80-150 basis points.
- BodyOil marketing companies can now buy dollars directly from the Reserve Bank of India (RBI).
Prelims practice question
Which entities are now permitted to buy dollars directly from the Reserve Bank of India?
- (a)Retail banks
- (b)Oil marketing companies
- (c)State-owned logistics firms
- (d)Export houses
Show answer
Answer: (b) Oil marketing companies — The note states that oil marketing companies are now permitted to buy dollars directly from the RBI.
For Mains
Q. Discuss the role of the Reserve Bank of India in managing exchange rate volatility and the implications of curbing speculative activity on corporate hedging costs.
Dimensions to cover in your answer
- Market distortion: Balancing the need to curb speculative volatility against the increased cost of hedging for corporate entities.
- Liquidity management: The efficacy of special deposit schemes versus direct intervention in the forex market.
Keywords: Exchange Rate Volatility · Monetary Policy · Speculative Activity · Currency Hedging · Forex Intervention
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This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.