The Reserve Bank of India is reportedly considering a range of measures — including a possible interest rate hike — to stabilize the Indian Rupee after the currency weakened to nearly 97 against the United States Dollar this week.
According to sources familiar with the discussions, top RBI officials, including Governor Sanjay Malhotra, have held a series of internal meetings to evaluate available policy responses.
Among the measures reportedly under consideration are:
- Raising interest rates
- Conducting additional currency swap operations
- Raising U.S. dollars from overseas investors
- Introducing special deposit schemes for non-resident Indians (NRIs)
- Potential issuance of a sovereign dollar bond
Sources indicated that some of the proposed measures resemble steps taken during the 2013 “taper tantrum” period, when India introduced special foreign currency deposit schemes to attract overseas inflows.
According to one source, the RBI estimates that similar schemes could potentially attract up to US$50 billion this time, compared to around US$30 billion raised previously.
Officials reportedly believe that although India’s economic fundamentals and banking system remain strong, those strengths are not currently reflected in the exchange rate.
The RBI’s immediate priority is said to be slowing or halting the rupee’s rapid depreciation.
The report noted that raising borrowing costs could help attract foreign investment into Indian bonds by widening the interest rate gap between India and the United States.
Foreign investors have reportedly continued to pull money out of Indian markets in 2026, with stock market outflows already surpassing last year’s record US$19 billion.
The RBI’s six-member Monetary Policy Committee is scheduled to meet from June 3 to June 5.
India’s benchmark interest rate has remained unchanged at 5.25% this year, although many economists now expect a rate increase in the coming months amid rising inflationary pressures.
Meanwhile, the RBI announced a US$5 billion swap auction on Wednesday aimed at improving banking system liquidity and strengthening the central bank’s foreign exchange reserves.
