India's Central Bank Considers Measures to Stabilize Rupee

India's central bank is exploring various options to stabilize the rupee's exchange rate, according to informed sources. These measures include potential interest rate hikes, increasing currency swaps, and raising dollars from overseas investors. According to Jin10, following the rupee's plunge to a historic low of nearly 97 against the dollar this week, senior officials, including Governor Sanjay Malhotra, have held multiple internal meetings to discuss viable responses. One source indicated that raising interest rates is now on the agenda. Another source mentioned that other measures being considered include raising dollars overseas through deposit schemes for non-resident Indians and issuing sovereign dollar bonds, although the latter decision rests with the Indian government. These measures are reminiscent of those taken during the 2013 'taper tantrum,' when India encouraged foreign currency inflows by offering deposit schemes through local banks for non-resident Indians. The central bank estimates that the current deposit scheme could attract up to $50 billion, compared to about $30 billion previously.