The rupee climbed almost 2% to 92.94 per U.S. dollar after the latest central bank measures to curb a near one-way move witnessed in the currency over the last few days.
The central bank has tightened rules to curb arbitrage flows and speculative bets that have weighed on the currency, even as concerns persist over India’s current account and weak capital flows.
In a sweeping move, India barred banks from offering the most widely used offshore rupee trading instrument, disrupting a $149 billion-a-day market to stabilise the currency, according to Bloomberg data. The measures, among the toughest in over a decade, come as the rupee, already under pressure, has slid to record lows this year, with the Iran conflict exacerbating the decline.
On Wednesday, the RBI stepped up its efforts to support the currency by barring banks from offering rupee non-deliverable forwards to resident and non-resident clients and preventing companies from rebooking cancelled forward contracts.
Worries over deepening conflict in the Middle East have sparked a surge in energy prices, with Brent crude oil futures climbing about 5% to $106 per barrel on Thursday.
The rise followed U.S. Donald Trump’s remarks that the U.S. would hit Iran “extremely hard” within weeks, adding that military goals were nearly achieved and that the conflict was close to ending.
