Reserve Bank of India (RBI) has apparently entered crisis mode to halt a rupee free-fall, reactivating tools used during the 2013 taper tantrum. In under three months the RBI pushed banks to raise about $133bn from non-resident Indians; when that programme ended in August without reversing bearish sentiment, authorities last weekend raised lenders’ FX hedging costs and ordered oil importers to source dollars domestically, bypassing market exchange rates. The more authorities defend the psycholog

Reserve Bank of India (RBI) has apparently entered crisis mode to halt a rupee free-fall, reactivating tools used during the 2013 taper tantrum. In under three months the RBI pushed banks to raise about $133bn from non-resident Indians; when that programme ended in August without reversing bearish sentiment, authorities last weekend raised lenders’ FX hedging costs and ordered oil importers to source dollars domestically, bypassing market exchange rates. The more authorities defend the psychologically important 1 USD = 100 INR threshold, the greater the risk of costly over-intervention. USD/INR has traded around 95. Brent is above $100/bbl amid Middle East tensions, food-driven inflation is at a two-year high and surging US Treasury yields continue to drain EM flows, making the currency defence potentially unsustainable.