RBI extends derivative transaction curbs to support rupee against high oil prices
GS3Economy · S&T · Environment · Security· Monetary policy, RBI & banking· Prelims·
Monetary intervention and currency risk management: a key GS3 topic on exchange rate stability.
Why in news
The Reserve Bank of India (RBI) extended derivative transaction curbs and widened foreign-exchange risk reserve scopes to stabilize the rupee against high oil prices and capital outflows.
Background
The RBI implemented these measures to counter the impact of high oil prices on the Indian Rupee. On Tuesday, the rupee rose by 0.8 per cent to reach 95.01 per dollar, following a 1 per cent gain on Monday.
Facts for Prelims
- FactThe rupee reached 95.01 per dollar on Tuesday following a 0.8 per cent rise
- FactThe rupee gained 1 per cent on Monday before the Tuesday rise
- S&TDerivative transaction curbs: Regulatory measures to manage currency risk and volatility
Prelims practice question
What was the specific exchange rate reached by the rupee on Tuesday following the RBI's intervention?
- (a)95.01 per dollar
- (b)94.50 per dollar
- (c)97.10 per dollar
- (d)96.20 per dollar
Show answer
Answer: (a) 95.01 per dollar — The note states the rupee reached 95.01 per dollar on Tuesday following a 0.8 per cent rise.
For Mains
Q. Analyze the effectiveness of monetary interventions and derivative curbs in managing currency volatility amidst global commodity price shocks.
Dimensions to cover in your answer
- Monetary intervention: Balancing capital account stability with the need for market-driven exchange rates
- External vulnerability: Impact of high oil prices on the Current Account Deficit and forex reserves
Keywords: Monetary Policy · Currency Volatility · Capital Outflows · Exchange Rate Management · Derivative Curbs
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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.