Noida, May 21 (APAC Media): The Reserve Bank of India (RBI) is considering a range of policy options, including a possible interest rate hike, as the rupee continues to face sustained downward pressure, according to Bloomberg News reports.
The domestic currency has remained under strain in recent trading sessions amid persistent foreign portfolio outflows, elevated crude oil prices and a firm US dollar.
The rupee has repeatedly touched record lows in the foreign exchange market, stoking concerns over imported inflation and broader macroeconomic stability.
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According to sources familiar with the matter, the central bank has held internal discussions on whether a calibrated monetary tightening move could help stabilise the currency and anchor inflation expectations.
However, officials are said to remain cautious, given the potential impact of higher interest rates on domestic growth momentum.
“The Indian rupee closed at a record low of 96.79 after touching an intraday low of 96.97. In response to persistent pressure on liquidity and currency stability, the Reserve Bank of India (RBI) announced a USD/INR buy-sell swap auction worth $5 billion with a three-year tenor, scheduled for May 26.” according to the reports.
Market participants said these interventions have helped moderate volatility to some extent but have not fully arrested the rupee’s gradual depreciation trend.
Economists noted that the weakness in the rupee reflects a combination of external and domestic factors. Global headwinds, including higher crude oil prices and a strong dollar environment, have been compounded by domestic pressures such as a widening current account deficit driven by elevated import costs.
They added that sustained foreign portfolio outflows have further weighed on investor sentiment, limiting the rupee’s ability to recover in the near term.
While no final decision has been taken, sources indicated that the RBI is expected to continue closely monitoring inflation dynamics, capital flows and exchange rate movements in the coming weeks.
Any policy response, they said, would likely depend on evolving global financial conditions and domestic economic indicators.
News Agency Inputs
Disclaimer: Views expressed are those of experts and do not reflect APAC Media. This is for informational purposes only, not financial advice. We are not responsible for investment decisions. Please consult a qualified financial advisor before investing.
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