The country’s monetary authority and its market regulator moved in to take the speculative fizz out of the currency market, helping to stabilise the tottering rupee on Tuesday. In a late evening move on Monday, the Reserve Bank of India (RBI) banned banks from doing any proprietary trading in the currency futures and exchange-traded currency options market. This effectively restricts them to transact only on behalf of clients. In a parallel action, the Securities and Exchange Board of India (SEBI), too, stepped in to tighten the exposure norms for currency derivatives.
The combined regulatory action helped the rupee open at 59.70 to a dollar, considerably higher than Monday’s close. Though it fell during the day to 60.48, the rupee rebounded to close at 60.14 a dollar, gaining 47 paise from Monday’s close.