Indian rupee posts best month in eight on RBI measures to curb dollar demand

The Indian rupee ended Friday at 94.95 per dollar, firmer than its previous close of 95.26, and gained about 1% over October. Business Recorder reported this was the currency’s strongest monthly showing since February, as steps by the Reserve Bank of India (RBI) helped ease demand for dollars. High oil prices and continuing foreign portfolio withdrawals, however, remained sources of pressure.

Measures introduced this month included shifting oil companies’ dollar buying away from the spot market and stricter limits on hedging, while the RBI has also acted to attract capital and temper dollar demand. India’s finance ministry said direct dollar supply to public oil marketers and curbs on currency speculation could support the exchange rate and limit imported inflation. The RBI also raised interest rates in October for the first time in nearly four years, while signalling further increases could follow; Goldman Sachs analysts said oil prices still pose a risk.