# Sitharaman says the Reserve Bank of India will keep limiting rupee swings without fixing a level

The rupee closed at 95.78 per dollar on Monday after the central bank opened a dollar window for state oil importers and tightened rules on currency derivatives.

- Published: 2026-10-14T05:07:36.512Z
- Canonical: https://polylog.news/2026-10-14/sitharaman-says-the-reserve-bank-of-india-will-keep-limiting
- Publisher: Polylog (Global desk)
- Section: macro
- Sources: [Mint (Economy)](https://www.livemint.com/economy/nirmala-sitharaman-rbi-trying-to-curb-rupee-volatility-not-fix-its-value-fiscal-discipline-should-not-worry-investors-11791883057725.html), [Economic Times](https://m.economictimes.com/markets/stocks/earnings/hardening-bond-yields-to-weigh-on-bank-profits-in-september-quarter/articleshow/134929613.cms)

Finance Minister Nirmala Sitharaman said the Reserve Bank of India (RBI) is trying to limit volatility in the rupee, not to fix its value, and that the currency should find its own level, [Mint reported](https://www.livemint.com/economy/nirmala-sitharaman-rbi-trying-to-curb-rupee-volatility-not-fix-its-value-fiscal-discipline-should-not-worry-investors-11791883057725.html). She said the rupee had held firm and had probably appreciated since the central bank's latest measures. She also told investors that fiscal discipline should not worry them.

The RBI set up a special window to supply dollars to oil marketing companies, which takes their large dollar demand out of the spot market. It also tightened rules on foreign-exchange derivatives to limit speculative positions against the rupee, [ETV Bharat reported](https://www.etvbharat.com/en/business/rbi-to-continue-efforts-to-curb-rupee-volatility-external-factors-driving-currency-fall-fm-enn26101304751). Sitharaman said the rupee had fallen "very significantly" over the past year and a half and blamed external factors. The currency closed at 95.78 per dollar on Monday.

India also borrowed dollars from Indians abroad. Under a central-bank swap for foreign-currency deposits from non-resident Indians (the FCNR-B scheme), banks raised $133 billion by August 31. The window closed a month early because demand was strong, [Investmates reported](https://investmates.io/blog/fcnr-rates-rbi-swap-window), and deposit rates reached 6% to 7.1% at major banks.

The costs are showing up in bank earnings. Net interest income at Nifty 50 banks is expected to rise 11.5% in the September quarter, but net profit is expected to grow only about 10% because rising bond yields cut the value of their securities holdings, [the Economic Times reported](https://m.economictimes.com/markets/stocks/earnings/hardening-bond-yields-to-weigh-on-bank-profits-in-september-quarter/articleshow/134929613.cms). FCNR-B inflows supported deposit growth.

## What this means

India has chosen administrative tools over price signals to defend the rupee. A separate dollar window for oil importers rations market access, and derivative curbs limit how foreign and domestic traders can hedge or bet. Both are mild forms of capital control. The diaspora deposits strengthen reserves now but create dollar obligations later. The precedent is 2013, when an FCNR-B swap raised about $34 billion and stabilized the rupee. The RBI then had to manage the redemptions in 2016. The pressure comes from oil above $100, which widens India's import bill. Foreign holders of rupee assets, Indian banks' bond portfolios, and companies that hedge in the offshore market are exposed. The consensus sees the measures as having worked because the rupee firmed. The more likely outcome is that they hold the currency steady for weeks to a few months while Brent stays near current levels. If Gulf escalation pushes crude clearly higher, expect the RBI to move toward rate increases or tighter limits on capital outflows. A sustained fall in oil or large equity inflows that let the RBI remove the oil window would prove this wrong.

## What to watch

- The level of India's foreign-exchange reserves in weekly RBI data. A steady decline would show the central bank spending reserves to defend the currency.
- Any further RBI rules on rupee derivatives or overseas remittances. More restrictions would raise the cost of moving capital in and out of India.