New Delhi, October 12 (Daily Kiran) : Strengthened foreign exchange reserves may allow the Indian rupee to rise to 94.50 against the dollar in the short term. However, a recent report emphasizes that the government must undertake structural measures to boost capital inflows into the country.
According to SBI Research, the balance of payments (BOP) surplus for the fiscal year 2027 could decrease to approximately $55-60 billion. Despite this, India’s foreign exchange reserves are deemed sufficient to handle any emergencies, even under challenging circumstances.
The report outlines several monetary and regulatory steps taken by the Reserve Bank of India (RBI) to support the rupee. It also highlights additional fiscal and tax measures that the government should consider to maintain investor confidence.
The analysis suggests that reducing liquidity for the rupee could lead to a decrease in its supply. Additionally, increasing the Marginal Standing Facility (MSF) rate could elevate the rupee’s value. These measures could help stabilize the rupee’s value in the short term.
The RBI has opened a direct window for government oil marketing companies to access dollars, allowing approximately $10-12 billion to flow monthly outside the open spot market. The daily Cash Reserve Ratio (CRR) requirement has been raised to 99%, with an announcement of a ₹25,000 crore open market operation sale.
To prevent misuse of foreign exchange hedging facilities, the RBI has tightened documentation requirements. Authorized dealers must now obtain an undertaking from users engaging in foreign exchange derivative contracts linked to the Indian rupee, confirming that no hedging has been done with another authorized dealer for the same underlying exposure.
To ensure the smooth functioning of the foreign exchange market, the RBI has also imposed restrictions on the rebooking of canceled foreign exchange derivative contracts.
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