India backs RBI moves to curb rupee volatility and speculation
India's government is fully behind the Reserve Bank of India (RBI)'s tough new moves to stop wild swings in the rupee.
The central bank isn't setting a fixed value for the currency, but it has told state-run banks to refrain from speculative positions in offshore markets when the rupee is under pressure, even though the banks have seen profits growing in recent years.
The RBI is also putting tighter limits on certain currency contracts and capping daily trading positions, which shakes up a $149 billion-a-day global market.
Rupee jumps 2% largest since 2013
After these measures, the rupee shot up 2%, its biggest single-day jump since 2013, even while other Asian currencies were struggling due to U.S.-Iran tensions.
Since India is a major oil consumer and importer (making it extra sensitive to global shocks), the RBI says it's ready to use its foreign exchange reserves (which dropped by more than $30 billion in the first three weeks of March) if needed.
This time around, officials are confident: India's economy is in better shape now than it was back then, signaling they'll keep defending the rupee if things get rough.