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The currency strengthened sharply in Colombo trading, touching 328 to the dollar from weaker levels around 336.50 before settling in a wider 332-334 range. The previous close was near 337.00-337.75, underscoring the immediate impact of the central bank’s intervention on market sentiment. The move marks one of the rupee’s strongest single-session gains this year after months of pressure linked to higher fuel bills, vehicle imports and heavy demand for dollars from importers.

The new rule, issued through an extraordinary gazette under the authority of Governor Nandalal Weerasinghe, requires exporters of goods receiving proceeds during a calendar month to convert the residual foreign exchange into Sri Lankan rupees on or before the tenth day of the following month. The change effectively reduces the conversion window to about 30 days from the earlier period of about 90 days, after permitted payments are made.

The directive came into immediate effect and applies to exporters after they use proceeds for authorised payments such as imports, debt servicing and other approved foreign currency obligations. It reverses part of the relaxation introduced in 2024, when the central bank gave exporters more time to convert proceeds as foreign exchange conditions improved after the country’s debt crisis.

The latest measure is designed to bring export dollars more quickly into the domestic market at a time when the rupee has come under renewed strain. The currency had fallen by about 8 per cent this year before the intervention, reflecting a combination of stronger import demand, elevated global energy prices and cautious dollar conversions by exporters waiting for more favourable rates.

Market participants said the shortened conversion period could provide near-term support by increasing the supply of dollars through the banking system. The effect, however, may be temporary if importers absorb the additional liquidity quickly, particularly with fuel, medicines, vehicles and intermediate goods continuing to drive demand for foreign exchange.

The rupee’s rebound follows a series of policy moves by the Central Bank of Sri Lanka to contain pressure on the currency and inflation. On May 26, the central bank raised the overnight policy rate by 100 basis points to 8.75 per cent, its largest increase since 2023, signalling a shift away from growth support towards price and currency stability. The rate move followed a faster-than-expected rise in inflation and a renewed deterioration in external conditions.

Headline inflation in Colombo stood at 5.5 per cent in May, marginally above the central bank’s target and slightly higher than April’s 5.4 per cent. Price pressures have been fuelled by energy adjustments and the spillover from tensions in the Middle East, which have pushed up import costs for fuel-dependent economies. Construction firms have also reported higher input costs and shortages of petrochemical-based materials.

The central bank has already spent foreign exchange to defend the currency. Around $211 million was used in May as the rupee tested its weakest level in four years on May 21. Foreign reserves fell 3.8 per cent in April to about $6.7 billion, reflecting the cost of higher imports and intervention, although reserves remain well above the crisis levels seen during the 2022 balance-of-payments collapse.

Sri Lanka’s external position has become more fragile after a stronger start to the year. The current account moved into deficit in April after surpluses during the first quarter, mainly because of a wider trade gap, a softer services surplus and higher primary income outflows. Workers’ remittances continued to improve, offering some relief, but the recovery in imports has changed the balance in the foreign exchange market.

The policy shift also comes as Sri Lanka remains under a $2.9 billion International Monetary Fund programme designed to restore macroeconomic stability after the country’s sovereign default. A further $695 million disbursement was approved in late May, helping support reserves and fiscal reforms, but the economy remains exposed to external shocks, especially oil price volatility and shifts in investor confidence.

The amended rules, issued through Notification No. 19/2026-27 dated 2 June 2026, apply with immediate effect to silver powder, silver grains, silver of 99.9% purity or more, and other unwrought silver. The change adds a fresh approval layer to a trade channel that was already limited to nominated agencies, banks and qualified jewellers using authorised routes.

The affected ITC codes include 71061000 for silver powder, 71069110 for silver grains, 71069120 for silver containing 99.9% or more by weight of silver, and 71069190 for other unwrought silver. These categories fall within the broader heading for silver, including silver plated with gold or platinum, in unwrought, semi-manufactured or powder form.

Until the amendment, eligible imports could be routed through banks notified by the Reserve Bank of India, agencies notified by the DGFT, and qualified jewellers notified by the International Financial Services Centres Authority for imports through the India International Bullion Exchange. The new framework keeps those channels in place but requires a valid DGFT Import Authorisation before shipments can proceed.

The order marks a sharper shift in bullion management after curbs were placed in May on silver bars of 99.9% purity and other semi-manufactured forms. Together, the steps move a large portion of silver inflows away from a relatively open framework towards a case-by-case approval regime. The policy direction points to closer official monitoring of volumes, end-use and trade routing at a time when precious-metal purchases have added pressure to the external account.

Silver imports have climbed sharply, with the country’s import bill for the metal touching a record $12 billion in the financial year ended March 2026, compared with $4.8 billion a year earlier. April shipments rose 157% year on year to $411 million, underlining the scale of demand before the latest controls took effect.

The bullion market is likely to feel the immediate impact through slower approvals, tighter availability and wider domestic premiums if import authorisations do not keep pace with demand. Dealers have already been adjusting to a compliance-heavy environment, including the April publication of the list of banks authorised to import gold and silver until March 2029 after delays had held up consignments at customs.

The policy also comes after duties on gold and silver were raised to 15% from 6%, a move aimed at discouraging discretionary imports of precious metals. Higher tariffs and tighter licensing conditions together indicate a broader attempt to contain import demand, protect foreign exchange reserves and reduce pressure on the rupee at a time when oil and other commodity bills remain sensitive to global price swings.

Industrial users will be watching the authorisation process closely because silver is not only a bullion and jewellery metal. It is used in electronics, solar cells, conductive pastes, precision engineering, industrial chemicals and electrical components. Silver powder and grains are important inputs for manufacturers as well as refiners and jewellers, making clarity on approval timelines essential for supply planning.

Investment demand has become a larger part of the market’s momentum. Silver bars, coins and exchange-traded products have attracted interest from investors looking for exposure to precious metals, particularly when global uncertainty and currency volatility lift demand for hard assets. That trend has complicated policy choices because the same metal feeds both household savings and industrial supply chains.

The India International Bullion Exchange remains central to the formalisation of bullion trade through GIFT City, especially for qualified jewellers using the exchange route. By requiring DGFT authorisation even for eligible jewellers importing through IIBX, the amendment signals that institutional routing alone will no longer be treated as sufficient compliance for specified silver categories.

Silver dore imports by refineries continue under the existing licence framework with actual-user conditions where applicable, leaving the refining route distinct from the broader authorisation requirement for covered products. This distinction matters for refiners that process raw material into marketable silver, though they too are operating in a tighter policy environment.

Major supply sources for the country include the UAE, Britain and China, making the rule change relevant for global bullion flows as well as domestic trade. Suppliers may face slower shipment planning, while banks and nominated agencies will need to factor DGFT approvals into import schedules.

The immediate test for the new system will be administrative efficiency. A transparent and predictable authorisation process could help the government track sensitive inflows without disrupting legitimate industrial consumption. Delays, however, could push up local premiums, affect manufacturers dependent on imported feedstock and encourage buyers to shift procurement strategies.

Customs figures showed a sharp rise in outbound shipments of unwrought aluminium and aluminium products, extending the strong performance seen in April, when exports reached 598,000 metric tonnes. The increase underlined China’s role as the main buffer for a global market unsettled by production cuts, shipping delays and higher insurance costs linked to the conflict around the Gulf and the Strait of Hormuz.

The aluminium surge came as China’s wider trade machine gathered pace. Total exports rose 19.4 per cent from a year earlier in May, beating forecasts and widening the trade surplus to more than $105 billion. Imports also grew 27.4 per cent, but the headline gain masked a sharp fall in crude purchases, with volumes down about 29 per cent as refiners leaned more heavily on inventories and cut some buying amid elevated freight and geopolitical risks.

Aluminium has become one of the clearest channels through which the Middle East war is reshaping industrial supply chains. Producers in Gulf states account for a meaningful share of non-Chinese primary aluminium supply, and disruption to power-intensive smelting, port activity and shipping routes has tightened availability for consumers in Europe, Asia and North America. Prices in London climbed to a four-year high this month as traders priced in the risk of prolonged supply constraints.

Chinese exporters have benefited from the opening. Producers and traders have increased shipments of semi-finished products and other aluminium categories where overseas premiums have risen faster than domestic prices. The price gap has improved margins for exporters, even as Beijing continues to manage capacity growth in a sector long associated with heavy energy use and emissions.

The market shift is particularly important for manufacturers in transport, construction, packaging, power infrastructure and renewable energy. Aluminium is widely used in electric vehicles, aircraft parts, solar frames, building systems and high-voltage transmission equipment. A sustained shortage outside China could raise input costs for industries already dealing with expensive financing, disrupted shipping schedules and volatile energy markets.

China’s advantage rests on scale. The country dominates global aluminium production and has built deep processing capacity across provinces such as Shandong, Henan, Guangxi and Yunnan. Its producers can move quickly when export margins improve, though output remains constrained by power costs, environmental controls and the national ceiling on smelting capacity.

The export rise also carries political sensitivity. Western governments have long argued that China’s industrial policies create excess capacity and depress global prices. A fresh wave of metal exports, even if driven by war-related shortages, could sharpen trade friction at a time when the United States, Europe and other economies are expanding scrutiny of Chinese goods in sectors ranging from steel and batteries to solar components and electric vehicles.

Crude oil tells a different story. China remains the world’s largest crude importer, but May’s decline showed how refiners are adjusting to uncertainty in Gulf shipping. The Middle East supplied a large share of China’s crude last year, with Saudi Arabia, Iraq, the United Arab Emirates, Oman, Kuwait and Qatar among key reported suppliers, while Iranian barrels have continued to reach Chinese buyers through opaque trading channels.

Refiners have drawn on commercial and strategic inventories built during earlier periods of lower prices and heavy discounted buying. Weak domestic fuel margins have also reduced the incentive to import aggressively. Independent refiners in Shandong and state-run plants have faced pressure from high crude costs, capped fuel prices and softer demand growth as electric vehicles erode petrol consumption.

The fall in crude imports may help ease immediate pressure on global oil markets, but it also reflects the vulnerability of China’s energy security to maritime disruption. The Strait of Hormuz remains central to crude and liquefied natural gas flows, and any prolonged interruption would force Beijing to rely more on stockpiles, pipeline supplies from Russia and Central Asia, and alternative seaborne routes.

For commodity markets, May’s trade data showed a split picture. Metals exports are expanding where China can monetise overseas shortages, while energy imports are being managed more cautiously to reduce exposure to war-driven price spikes. Copper imports slipped from April, suggesting that parts of the manufacturing supply chain remain uneven despite the strong headline export performance.

From the spectacular underwater suites at Atlantis Sanya, to the colorful street-art alleys of Tianya Town, and the rooftop infinity pool at Sanya Conifer Resort, each stop gave the visitors a fresh impression of Hainan. Many visitors paused to capture the scenery, remarking with delight: “Sanya is full of surprises!”

Exploring Luxury Resorts and Applauding World-Class Service

At 10 a.m. on June 4, the tour operators arrived at Atlantis Sanya. Upon entering the lobby, they were immediately captivated by the resort’s massive aquarium, where sharks, rays, and other marine creatures glided gracefully through the water. The group was visibly amazed.

The group toured both the ocean-view suites and the resort’s signature underwater suites. In the latter, floor-to-ceiling windows offer direct views into the aquarium, allowing guests to lie in bed and watch marine life drift by as if they were beneath the sea.

“The underwater suite concept is truly unique. Very few hotels in the world can offer an experience like this,” said tour operator Vivian He from Hong Kong. “The dreamlike setting would make an outstanding feature for honeymoon packages and would appeal strongly to younger travelers. I’ve already taken plenty of photos and videos on my phone and plan to use them for promotion when I return.”

The group then traveled to Hyatt Regency Sanya Tianli Bay in Tianya District. Strolling through palm-lined gardens, they were greeted by breathtaking views where the infinity pool seemed to merge with the sea and sky beyond. Many guests stopped to take photos, fascinated by the striking visual effect, which made it look as though water flowed directly into the ocean.

“The design is incredibly clever. It gives you the urge to dive right in and swim toward the sea,” said Julia, a tour operator from Germany, while taking photos of the stunning view. Having worked in the European outbound travel market for many years, she was visiting Sanya for the first time. “In Europe, hotels with sea views like this often come with a very high price tag. Hainan offers excellent value for money. Combined with China’s visa-free policy for travelers from 86 countries, it has tremendous appeal for European visitors.”

The hotel’s representative introduced the group to the property’s all-ocean-view suites, children’s amusement facilities, and its distinctive pink-sand beach. Natthapat, a tour operator from Thailand, showed particular interest in these features. “The children’s facilities and the pink-sand beach are perfect for family travel products. When I return home, I’ll discuss with my team how we can incorporate this destination into our product offerings.”

The delegation then proceeded to Rosewood Sanya. The hotel’s sky lobby, located on the 14th floor, offers sweeping 270-degree ocean views. Equally impressive was the elevated infinity pool on the 13th floor. Suspended between sea and sky, the pool’s edge appears to merge with the horizon, creating a spectacular setting from every angle.

“This is one of the most visually stunning hotel pools I’ve ever seen,” said Amy, a tour operator from Australia, while admiring the view from the poolside. She noted that Australian travelers also have a strong preference for luxury resort experiences, and the design aesthetic and sense of privacy here align perfectly with the expectations of the high-end market.

Throughout the visit, many tour operators actively exchanged business cards with hotel sales representatives, inquiring about partnership opportunities, group rates, and capacity for group reception. A tour operator from Southeast Asia said that he hopes to bring a group of high-end family travelers to experience Sanya’s luxury resort offerings.

Tianya Town’s Artistic Transformation Resonates with Tour Operators

The delegation also visited Tianya Town, where they experienced the unique charm of this “seaside arts village.” From the colorful mural-covered walls at the entrance of Huanglong Street, to the pure-white architecture of Sanya Guanxia Seaview B&B, and the cave-inspired interiors of Malt Cave Seaview Café, every corner became a favorite photo stop.

“This is completely different from the fishing village I imagined,” said Eter, a tour operator from Georgia, pausing at the iconic “18° North Latitude” landmark to examine the coordinates displayed on the wall. She noted that the destination could be easily integrated with the coastal tourism resources of Sanya, Lingshui, and Wanning. “Visitors are drawn to places with distinct geographic markers, which give the destination a sense of occasion.”

A local guide accompanying the group explained that in recent years, Tianya Town has undergone a series of small-scale renovations and refined upgrades. While retaining the original layout and character of a traditional fishing village, it has incorporated contemporary artistic elements, evolving into a popular photo-friendly destination. Today, Tianya Town is home to dozens of seaview guesthouses, cafés, and cultural and creative shops, making it especially popular among younger travelers.

“These small but beautifully designed destinations are exactly what many European travelers are looking for,” said Zhang Jing, a tour operator from Ireland. “Many European visitors are keen to experience local culture and everyday life when they travel. Tianya Town combines fishing village stories, artistic ambiance, and seaside accommodations. It has tremendous appeal.”

Inside one of the town’s cultural and creative stores, the visitors showed great interest in souvenir products featuring traditional Li ethnic totems. France, a tour operator from the United States, even inquired on the spot about purchasing the products in bulk as gifts for clients.

Meanwhile, Korean tour operator Lee Jae-hyun was particularly impressed by the town’s photogenic appeal. “Every corner is picture-perfect. Young people in Korea love destinations that look great in photos. If Tianya Town were included in independent travel packages, I’m sure it would be very popular.”

Duty-Free Shopping Drives Strong Interest and New Cooperation Opportunities

On the afternoon of June 4, the tour operators continued their familiarization tour with visits to Sanya Conifer Resort and Pullman Oceanview Sanya Bay Resort & Spa.

At Pullman Oceanview Sanya Bay Resort & Spa, the group was introduced to the hotel’s comprehensive conference facilities and family-oriented amenities. Guests were particularly intrigued by the hotel’s exclusive underground passageway, which provides direct access to Sanya Bay Beach.

Sanya Conifer Resort, meanwhile, impressed visitors with its iconic 70-meter-high rooftop infinity pool. Offering panoramic views of the Sanya Bay coastline, the elevated waterscape has become one of the hotel’s signature attractions. Its distinctive architectural design also earned high praise from the international tour operators.

Later that day, the delegation arrived at the final highlight of their Sanya tour—a self-guided visit to the CDF Sanya International Duty Free City. As the world’s largest single-building duty-free shopping destination, the complex brings together more than 800 international brands.

Aziz, a tour operator from Malaysia, found himself spoiled for choice in the cosmetics and fragrance section. “Malaysian travelers love duty-free shopping. The selection of brands here is impressive, and the pricing is highly competitive. If duty-free shopping can be combined with resort stays as part of a travel package, I believe it would be extremely well received by the market.”

Julia, a tour operator from Germany, was equally impressed by the scale and variety of the shopping complex. “European travelers enjoy purchasing luxury goods and cosmetics, and Sanya’s duty-free advantages are very clear. I believe Sanya has the potential to become a new favorite destination among European visitors.”

After several days of exploration across Hainan, tour operators from around the world expressed strong interest in developing partnerships in sectors ranging from sports tourism and wellness travel to cultural and leisure tourism. Shirley, a tour operator from Australia, paid particular attention to Hainan’s sports tourism resources. “Hainan has outstanding assets for sports tourism, especially golf and coastal outdoor activities. These resources are ideal for developing sports-focused holiday products. Australian consumers are passionate about sports travel, and I plan to introduce Hainan’s sports tourism offerings to the Australian market.”

According to officials from the Sanya Municipal Bureau of Tourism, Culture, Radio, Television and Sports, the city has launched several new international air routes since the beginning of this year, contributing to steady growth in inbound visitor arrivals. Looking ahead, Sanya will continue to improve its inbound tourism services and strengthen international market outreach, encouraging more global tour operators to include the city in their product portfolios.

Sunny Hainan, heart’s desire. Although the two-and-a-half-day familiarization tour was brief, it provided tour operators from around the world with a firsthand look at Sanya’s diverse tourism offerings and strong hospitality capacity. More importantly, it allowed visiting industry professionals to identify tangible opportunities for future cooperation. With the continued expansion of international flight connections and the ongoing optimization of inbound travel policies, Sanya is embracing the world with an increasingly open and welcoming outlook, ready to receive more visitors from across the globe.

Hashtag: #SanyaTourismBoard

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By Nantoo Banerjee It is good that the government has finally decided to introduce the Producer Price Index (PPI) as a more reliable inflation tracker than the Wholesale Price Index (WPI). However, it may not be desirable to dump WPI entirely after a period of the next five years. Wholesale price levels remain highly valuable […]

The article Producer Price Index Is Welcome Though WPI Need Not Be Dumped appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The statement followed reports that a fire broke out on the tanker MT Marivex near Omani waters on Monday, with preliminary information indicating that 24 seafarers from India were on board. Early inputs from shipping and seafarer welfare channels said the crew were safe, although officials were still verifying the vessel’s condition, the cause of the fire and the exact location of the ship.

The incident has drawn attention because it occurred close to one of the world’s most sensitive maritime corridors, where tankers moving energy cargoes between the Gulf, Asia, Africa and Europe routinely pass through the Gulf of Oman and the approaches to the Strait of Hormuz. The waterway remains under close watch after months of heightened security alerts affecting commercial shipping and civilian mariners.

MT Marivex is listed in maritime databases as an oil and chemical tanker built in 2009, with the vessel associated with the Palau flag in live tracking records. Its published identification details include IMO number 9464156 and a length of about 135 metres. Tracking data placed the vessel in the Arabian Sea area and showing a voyage linked to Duqm, an Omani port that has become increasingly important for energy, logistics and industrial activity.

Officials in New Delhi and Muscat are understood to be working through diplomatic and maritime channels, including the embassy, shipping authorities, naval contacts and the vessel’s commercial representatives. The immediate priority is confirmation of the crew’s condition, access to emergency support, and coordination with Omani maritime agencies if evacuation, firefighting or medical assistance is required.

Seafarer unions had urged authorities to act swiftly after distress information emerged from the crew. The appeals focused on the need for direct contact with the vessel, clarity on whether the fire had been contained, and assurance that rescue assets were available. Such calls have become more frequent as commercial crews have faced rising exposure to conflict-linked disruption, fires, mechanical failures and security alerts across West Asian waters.

The incident also places renewed scrutiny on safety protocols for crews operating near the Gulf of Oman. Shipping advisories issued over the past months have urged masters and crew to maintain constant watch, report suspicious activity and follow international ship and port security procedures. Risks in the area include fire, collision, drone activity, missile threats, small craft movements and navigational disruption caused by conflict-related alerts.

No official confirmation had established whether the MT Marivex fire was caused by an attack, technical failure or another onboard emergency. Authorities were treating the first stage of the response as a safety and rescue matter while verifying facts. That cautious approach reflects the sensitivity of the region, where inaccurate early claims can complicate maritime operations and diplomatic coordination.

Oman has a record of working with foreign missions during incidents involving seafarers and vessels in its waters. Its maritime agencies have previously coordinated search-and-rescue operations off Duqm and in the Gulf of Oman, including cases involving tankers and mixed-nationality crews. Such operations can be difficult when vessels are adrift, carrying flammable cargo, or operating in rough seas.

The Embassy of India’s response is also shaped by the large number of seafarers from India working on foreign-flagged ships. Many serve on tankers, bulk carriers, container ships and offshore vessels across Gulf routes. Their welfare has become a central concern for diplomatic missions as shipping disruptions in the region have moved beyond cargo delays and insurance costs to direct crew-safety risks.

For shipping companies, the episode underlines the operational pressures affecting tankers and other commercial vessels near Oman. Owners and managers must balance commercial schedules, crew contracts, war-risk insurance, route planning and regulatory compliance. A single onboard fire can trigger port-state coordination, salvage assessment, environmental monitoring and crew repatriation procedures.

By Asad Mirza Marking exactly 100 days since a catastrophic conflict reordered the Middle East, a fragile, US-brokered truce violently collapsed as Israeli jets struck deep inside Iranian territory. By directly defying President Donald Trump’s explicit warnings to exercise restraint, Israeli Prime Minister Benjamin Netanyahu has pushed the region into uncharted waters, leaving a heavily […]

The article Israel’s Defiance Of Trump Shatters The Truce In The US-Iran War appeared first on Latest India news, analysis and reports on Newspack by India Press Agency).

The rise marks a sharp escalation in the central bank’s effort to cushion the currency after the rupee weakened to a record low near 97 to the dollar on 20 May. The position, built through forward and offshore derivative contracts, shows how the central bank has increasingly relied on future dollar sales rather than only spot-market intervention to manage disorderly moves in the exchange rate.

The rupee traded around 95.3 to the dollar on 8 June, giving back part of the gains made after the central bank announced measures on 5 June to attract foreign-currency inflows and ease pressure on the balance of payments. The currency had closed near 94.95 on 5 June, its strongest one-day performance in about two months, after the measures were unveiled.

Forward-market intervention allows the central bank to signal dollar availability without immediately drawing down spot reserves. By selling dollars for future delivery, the RBI can influence market expectations, compress forward premiums and reduce one-way speculative pressure against the rupee. The method, however, creates future obligations and can complicate liquidity management when contracts mature.

The central bank’s net short forward book had already reached about $104 billion by the end of March, rising sharply from around $77 billion a month earlier. The move beyond $110 billion indicates that intervention continued through May and early June as global and domestic pressures intensified.

Oil prices, portfolio outflows, a firm dollar and geopolitical tensions have weighed on the rupee through much of the year. India’s large crude import bill makes the currency sensitive to oil-market swings, while higher US yields reduce the appeal of emerging-market assets. Equity outflows have added to the pressure, leaving the central bank to balance currency stability with the need to preserve reserves and domestic liquidity.

The RBI’s latest package seeks to reduce that burden by bringing in dollar flows rather than relying only on intervention. Measures include concessional foreign-exchange swaps for public-sector companies raising external commercial borrowings, support for banks mobilising foreign-currency non-resident deposits, and expanded access for overseas investors to longer-tenor government securities under the fully accessible route. Concentration limits for such investments were also relaxed.

The government’s decision to exempt overseas investors from capital gains tax on certain government bond transactions has strengthened the policy push. Market expectations now centre on whether these steps can draw $30 billion to $50 billion in medium-term inflows, with a higher figure possible if global bond investors increase allocations.

The central bank has avoided using interest-rate increases as the primary defence for the rupee, preferring targeted foreign-exchange and inflow measures. That approach reflects the RBI’s effort to separate currency management from domestic monetary policy. Keeping policy rates focused on inflation and growth gives the central bank room to support activity while using reserves, swaps and forward positions to contain currency volatility.

Foreign-exchange reserves remain sizeable, though they have fallen from their February peak as the central bank intervened to smooth the rupee’s decline. The reserves provide an important buffer, but the growing forward position shows that the defence is no longer confined to visible reserve movements. Market participants are watching both the headline reserves number and the maturity profile of the forward book for signs of future stress.

A large net short dollar position is not unusual during periods of currency strain, but the scale now matters. When contracts mature, the central bank must either deliver dollars, roll positions forward, or offset the impact through liquidity operations. Each option carries trade-offs for money-market rates, banking-system liquidity and the credibility of currency management.

For importers, the intervention has helped reduce the risk of abrupt rupee depreciation, though hedging costs and uncertainty remain elevated. Exporters face a more complex picture, as a weaker rupee supports earnings in local-currency terms but volatility makes pricing and cash-flow planning harder. Banks, meanwhile, are adjusting positions as forward premiums move in response to central bank activity.

The exemption, effective from 1 April 2026, covers interest income and capital gains arising from the sale, exchange or transfer of specified government securities by eligible foreign institutional investors and the Bank for International Settlements. President Droupadi Murmu signed the Income-tax Ordinance, 2026 while Parliament was not in session, amending the new direct tax framework that took effect at the start of the financial year.

Foreign investors had been subject to long-term capital gains tax of 12.5% on listed bonds held for more than 12 months and withholding tax of 20% on interest from government securities. By removing the tax burden for eligible investors, the Centre is seeking to improve post-tax returns and make rupee debt more competitive at a time when global funds are weighing currency risk, oil-market volatility and geopolitical uncertainty.

The policy shift comes as the rupee has weakened by more than 5% this year, pressured by crude prices and sustained foreign selling in equities. The currency recovered after the announcement of measures aimed at attracting foreign currency inflows, but traders continued to watch oil prices, reserve levels and the central bank’s market operations for signs of durable support.

Reserve Bank of India kept the policy repo rate unchanged at 5.25% and announced steps to encourage dollar inflows, including support for foreign-currency borrowing by public sector entities, incentives for non-resident deposits and a longer window for exporters to repatriate proceeds. The central bank also revised its growth forecast to 6.6% and raised its inflation estimate to 5.1%, underlining the pressure created by imported energy costs.

The tax relief is aimed at deepening overseas participation in government securities after the inclusion of rupee bonds in major global debt benchmarks. Fully accessible route bonds have already been added to J. P. Morgan’s emerging market debt index and Bloomberg’s emerging market local currency index, widening the pool of passive and active investors that can allocate funds to sovereign debt. A separate decision on inclusion in broader global bond benchmarks is being watched by investors because it could influence medium-term flows.

Debt inflows have remained more resilient than equity flows, but the scale has not been sufficient to offset pressure from the current account and stock-market exits. Foreign investors have pulled large sums from equities this year, while government debt has continued to attract selective buying. Higher hedging costs and expectations of currency weakness have limited enthusiasm among some global investors despite the comparatively attractive yield on rupee bonds.

Market participants expect the tax exemption to help long-only funds, pension funds, sovereign investors and reserve managers that focus on net returns after tax. The measure could also support liquidity in benchmark government securities and reduce borrowing costs at the margin if foreign demand rises. For the Centre, a broader investor base would help absorb a large borrowing programme without placing excessive pressure on domestic banks and insurance companies.

The effect may still depend on factors beyond tax policy. Currency stability, inflation expectations, oil prices, fiscal credibility and the central bank’s approach to liquidity will shape overseas appetite. Investors that hedge currency exposure must still account for hedging costs, while those that remain unhedged face the risk of rupee depreciation wiping out yield gains.

The Ministry of Economy, Trade and Industry has set out a policy proposal calling for the rebuilding of between two and five reactors by the 2040s and up to 14 by the 2050s. The plan would add about 16 gigawatts of nuclear capacity, helping the country meet rising electricity demand from artificial intelligence, data centres, advanced manufacturing and wider electrification.

The proposal reflects a major shift in Japan’s energy strategy. After the Fukushima Daiichi disaster in March 2011, Japan shut all 54 operating reactors, leaving the world’s third-largest economy more dependent on imported liquefied natural gas, coal and oil. Only 15 of the 33 remaining operable reactors have returned to service, while many units face retirement pressure as they approach or exceed their permitted 60-year operating life.

Tokyo’s latest energy plan targets nuclear power at around 20 per cent of electricity generation by fiscal 2040, while renewables are expected to provide 40 to 50 per cent. Thermal power, which still accounts for a large share of supply, is expected to decline but remain important for grid stability and emergency backup. The policy removes earlier language about reducing reliance on nuclear power, replacing it with a call to maximise the use of both renewables and atomic energy.

The renewed push is driven by a combination of economic and geopolitical pressures. Japan imports most of its energy, leaving households and industry exposed to volatile fuel prices, shipping risks and currency swings. The war in Ukraine, instability in the Middle East and tighter global gas markets have strengthened the case within government for expanding domestic low-carbon baseload power.

Electricity demand, which had been broadly flat for years, is also expected to turn higher. The spread of AI computing, semiconductor plants, battery factories and digital infrastructure has increased concern that inadequate power supply could weaken Japan’s ability to attract investment. Officials view nuclear energy as a way to provide stable, large-scale electricity without increasing carbon emissions.

The plan is likely to benefit major utilities including Tokyo Electric Power, Kansai Electric Power, Kyushu Electric Power and Chubu Electric Power, although the sector still faces high regulatory, financial and social hurdles. Reactor replacement requires local consent, safety approval, heavy capital spending and long construction timelines. Japan has not built a new reactor since before Fukushima, and public trust remains fragile.

Safety concerns remain the central political obstacle. The Fukushima disaster, triggered by the March 2011 earthquake and tsunami, forced mass evacuations and left deep scepticism about official oversight of the nuclear industry. Questions over seismic risk, evacuation planning, spent fuel storage and operator transparency continue to shape public debate, particularly in communities near existing plants.

Controversies have added to the challenge. Chubu Electric has faced scrutiny over falsified seismic risk assessment data at the Hamaoka nuclear plant, a facility long viewed as sensitive because of its location in an earthquake-prone area. Incidents of that kind reinforce concerns among critics who argue that Japan should prioritise renewables, storage, grid upgrades and efficiency rather than committing to another generation of nuclear infrastructure.

Supporters counter that renewables alone will not meet Japan’s industrial needs quickly enough, given land constraints, permitting delays and the intermittency of solar and wind power. Offshore wind has long-term potential, while next-generation solar technologies such as perovskite cells are being promoted, but large-scale deployment will take time. Nuclear advocates argue that replacing old reactors with advanced designs could improve safety and reliability while supporting climate targets.

The government’s approach is to rebuild reactors at existing or decommissioned nuclear sites rather than open entirely new locations, a strategy designed to reduce political resistance and use established grid infrastructure. Next-generation reactors are expected to incorporate stronger passive safety systems and improved resilience against natural disasters, although costs and construction schedules remain uncertain.