New Delhi: The rupee may be finding its footing, but do not expect the Reserve Bank of India to put a ring around any particular exchange rate. Speaking at the Bloomberg New Economy Forum 2026 on Tuesday, Finance Minister Nirmala Sitharaman said the central bank will keep using its tools to stop the currency from swinging wildly, not to freeze it at some preferred number.
Her message was direct. The rupee has depreciated “very significantly” over the last year and a half, the minister said, but most of that weakness came from global developments, not domestic policy. With the central bank’s latest set of forex measures already steadying the currency this week, she made clear the RBI’s efforts “will continue”.
What the RBI has done so far
Over the weekend, the central bank announced a package of measures aimed at calming the foreign exchange market after a fresh slide in the rupee. Among them:
- A special dollar liquidity window for state-run oil marketing companies, so their large dollar demand no longer hits the spot market directly.
- Tighter rules around the rebooking of cancelled foreign exchange derivative contracts.
- Sharply lower thresholds for derivative transactions without underlying exposure, plus a 20 per cent reserve requirement on eligible forex derivative contracts above a set limit, to discourage speculative bets against the rupee.
The market response was quick. The rupee appreciated around one per cent on Monday, and strengthened to about 95 to the dollar in early trading on Tuesday, a sharp rebound from the pressure of recent weeks.
Volatility, not a target
Sitharaman was careful to draw a line that markets will watch closely. “They are not trying to fix the rupee. They are trying to stop the volatility,” she said of the RBI’s actions, adding that the government would “appreciate it if the rupee finds its own” level.
She attributed the currency’s slide largely to forces outside India’s control, including fluctuations in the US dollar, and pointed to sound macroeconomic fundamentals and adequate foreign exchange reserves as reasons for investor confidence. Fiscal discipline, she added, remains firmly in place.
The comments build on earlier government steps to attract dollars, including expanded foreign investment access to government securities and a special swap facility for Foreign Currency Non-Resident (Bank) deposits, under which banks have mobilised about $133 billion.
LTCG tax: the door is open
Perhaps the most market-sensitive part of the minister’s appearance had nothing to do with the rupee. With preparations for the 2027-28 Budget already under way, Sitharaman said the government is willing to hear views on long-term capital gains tax, securities transaction tax and the treatment of different asset classes.
“A lot of people are commenting on” LTCG, she said, both Indian and foreign investors. “It is healthy to have this debate, and I will be keenly hearing them.” She stopped short of committing to any change, noting it may not be the best moment to preview Budget decisions, but the signal to investors was unmistakable: tax rationalisation is on the table for discussion.
What it means for the weeks ahead
Three forces will decide the rupee’s path from here. First, global oil prices and the dollar’s direction, both of which sit beyond New Delhi’s control. Second, the RBI’s continued use of targeted forex tools, which the finance minister has now publicly backed. And third, sentiment, which tends to follow clarity on taxes and budgets as much as it follows macro data.
For now, the government’s line is steady: keep inflation contained, keep the fiscal math clean, let the currency find its own level, and step in only when the swings get rough. Markets appear to be buying that argument, at least for this week.
FAQs
Is the RBI fixing the rupee at a particular level?
No. Finance Minister Sitharaman said clearly that the RBI is working to curb excessive volatility, not to defend any specific exchange rate. The aim is orderly market conditions.
What steps has the RBI taken to support the rupee?
The latest package includes a special dollar window for oil marketing companies, tighter rules on forex derivative rebooking and higher reserve requirements on large speculative derivative positions.
Could LTCG tax change in the next Budget?
No decision has been announced. The finance minister said debate around LTCG tax and STT is healthy and that she will hear investors’ views during Budget consultations.
Why has the rupee been weakening?
According to Sitharaman, depreciation over the last year and a half has been driven mainly by external challenges, including dollar strength and global uncertainty, while India’s fundamentals and reserves remain sound.
The coming weeks will test whether the rupee’s rebound holds. What is settled, for now, is the policy stance: the RBI will keep intervening against wild swings, and the Finance Ministry is keeping its ear open on taxes. On both fronts, the message is steady hands rather than sudden moves.
