Indian Rupee: Policy steps shape currency outlook – DBS

DBS Group Research economist Radhika Rao highlights that India’s authorities are rolling out measures to address macro volatility and support the Indian Rupee (INR). The government has raised fuel prices and increased import duties on Gold and Silver, while also considering tax changes for foreign bond investors. Near-term INR performance is seen as sensitive to headlines and equity flow dynamics.

Authorities move to stabilise Rupee

"India raised fuel prices on Friday morning, with petrol and diesel prices up around INR 3/litre, which takes petrol prices higher by INR3.14/l up to INR 97.77/l across several cities, while diesel prices climbed by INR 3.11/litre to as high as INR 90.67/l, according to the press release."

"More measures to support the INR are underway. The government announced an increase in import duty on gold and silver and tightened a few administrative requirements yesterday, in a bid to contain inward purchases and dampen incremental demand for dollars."

"Press reports suggest that a cut in the withholding tax (WHT) on foreigners’ bond holding is being considered."

"Debt category has witnessed FPI outflows worth $613mn in FY27 ytd, after $2.8bn inflows in FY26, under the general limit, VRR and FAR windows."

"In the near-term, currency movements will be subject to headlines and prone to weakness till equity outflows reverse."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)