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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.

The hiring programme would expand the workforce of One 97 Communications, Paytm’s parent, by about 10 per cent from a base of roughly 40,000 employees. The company is also expected to reduce about 1 per cent of its staff, or nearly 400 employees, as it removes overlapping functions and redirects resources towards areas tied to revenue growth, automation and financial services distribution.

The planned additions will run through March 2027 and cover product, technology, artificial intelligence and senior leadership roles. Paytm has already added more than 800 employees over the past two months and is in the process of recruiting the next tranche as it widens its merchant network and builds AI-led tools across its platform.

The move reflects a broader recalibration inside the Noida-based fintech company after two years of regulatory pressure, cost discipline and business restructuring. Paytm is seeking to convert its large base of users and merchants into higher-value customers for loans, investments, insurance and other financial products, while keeping a tight watch on employee costs and operating expenses.

Chief Executive Officer Vijay Shekhar Sharma has been working to rebuild confidence after the Reserve Bank of India imposed severe restrictions on Paytm Payments Bank in 2024 and later cancelled the licence of the independently held affiliate in April 2026. One 97 Communications holds 49 per cent in the payments bank, while Sharma owns the remaining 51 per cent.

The banking affiliate’s closure has continued to shape staffing decisions. Most of Paytm Payments Bank’s employees have already exited over the past two years, with some absorbed into other parts of the fintech group. The remaining few hundred employees at the bank are expected to leave as the winding-down process advances.

Paytm’s latest hiring plan comes after a year in which the company sharply reduced headcount. Average on-roll employees fell from 43,960 in FY24 to 39,368 in FY25, a decline of about 4,600 people. A large portion of the workforce remains tied to sales, underlining the importance of merchant acquisition and field distribution in Paytm’s model.

The company’s restructuring has coincided with an improvement in profitability. Paytm posted four consecutive profitable quarters and reported its first full-year profit since listing, with FY26 net profit of about ₹552 crore compared with a loss of ₹663 crore in FY25. Revenue for FY26 rose to about ₹9,291 crore from ₹7,625 crore a year earlier.

For the March 2026 quarter, One 97 Communications reported a consolidated net profit of about ₹184 crore, compared with a loss of about ₹540 crore in the year-earlier period. Revenue from operations rose 18.4 per cent year-on-year to ₹2,264 crore, supported by payments services and financial services distribution.

The improved performance has given Paytm more room to invest in growth areas, but the company is still balancing expansion with caution. Its shares have gained around 7 per cent over the past year, though they remain more than 50 per cent below the 2021 initial public offering price, a reminder of investor concerns over profitability, regulation and the durability of its business model.

Artificial intelligence has become central to Paytm’s operating strategy. The company has used automation to reduce repetitive work in customer support, risk management, merchant servicing and internal processes. The next phase appears focused less on replacing headcount across the board and more on redeploying resources towards AI-enabled products, data-driven lending, fraud control and personalised financial offerings.

That shift mirrors a wider trend in the technology and fintech sectors, where companies are cutting roles in legacy or routine functions while hiring for engineering, machine learning, product design, compliance technology and platform operations. For Paytm, the challenge is sharper because its business relies on both software capability and a large physical merchant network.

The company began in 2010 as a mobile recharge platform before expanding into wallets, QR-code payments, Soundbox devices, payment gateways and financial services. Its growth accelerated after the 2016 currency note withdrawal pushed millions of merchants and consumers towards digital payments.

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 response came after the won slipped past psychologically important levels against the dollar, intensifying concern among policymakers over inflation, capital flows and financial stability. Finance Minister Koo Yun-cheol convened senior economic officials and signalled that Seoul would act quickly if market moves became excessive, while the Bank of Korea and financial regulators kept watch on trading patterns across currency, bond and equity markets.

The won traded around the 1,520 range against the dollar after touching levels not seen for years, reflecting a mix of domestic and external pressures. Higher energy import costs, a strong dollar, portfolio outflows and demand for overseas investments have combined to weaken the currency despite South Korea’s current account surplus and continued strength in key export sectors.

Authorities are seeking to draw a line between normal market adjustment and disorderly moves that could spill into inflation expectations or funding conditions. Their measures are focused on sharper surveillance of foreign exchange transactions, closer coordination among financial agencies and readiness to respond to speculative flows that amplify one-way bets against the currency.

Seoul has avoided announcing broad capital controls, mindful of its ambition to deepen market access and secure developed-market recognition from global index providers. Instead, officials are relying on targeted stabilisation tools, verbal intervention and coordination with major institutional investors to smooth dollar demand. The National Pension Service remains central to those efforts because of the scale of its overseas investment activity and its potential impact on dollar-won liquidity.

The currency’s slide has complicated the Bank of Korea’s policy choices. Inflation rose to 3.1 per cent in May, the highest level in more than two years, pushed up by petroleum products and international travel costs. A weaker won increases the local-currency cost of imported fuel, food and raw materials, raising the risk that price pressures remain above the central bank’s 2 per cent target for longer than expected.

Rate policy now sits at the intersection of slowing growth, currency stability and household debt risks. A rate increase could support the won and restrain inflation, but it would add pressure on consumers and businesses already facing tighter financing conditions. Holding rates steady could protect domestic demand, but might leave the currency exposed if dollar strength persists or foreign investors continue to rebalance away from won assets.

Market pressure has also been shaped by South Korea’s stock market boom and its role in global technology supply chains. The country’s chipmakers and artificial intelligence-linked companies drew heavy investor interest, but sharp gains have also encouraged profit-taking and portfolio reallocation. When offshore investors sell equities or hedge exposure, demand for dollars can rise, adding to currency volatility.

Exporters have not provided the same level of support to the won that authorities might have expected during previous cycles. Companies with large overseas revenues have been cautious about converting dollar earnings, partly because of expectations of further currency weakness and partly because global investment plans require foreign currency holdings. That has deepened the imbalance between dollar demand and supply.

South Korea’s external position remains stronger than the currency’s movement alone suggests. The economy continues to benefit from semiconductor exports, sizeable foreign reserves and a sophisticated financial system. Yet the won has become more sensitive to swings in global risk appetite, partly because households, pension funds and institutional investors have increased overseas securities purchases over the past several years.

The government’s challenge is to calm markets without appearing to defend a fixed exchange-rate level. Officials have framed their intervention as an effort to prevent excessive volatility rather than reverse market fundamentals. That distinction matters because heavy-handed action could invite criticism from trading partners and undermine Seoul’s commitment to market liberalisation.

The United States and South Korea have already discussed currency stability, with both sides describing excessive volatility in the won as undesirable. Those consultations add a diplomatic layer to Seoul’s response, especially as South Korea balances foreign exchange concerns with large investment commitments abroad and shifting trade policy under Washington’s current tariff regime.

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.

By Dr. Gyan Pathak The preliminary version of the OECD Outlook released on June 3, 2026 has projected the real GDP of India to grow by 6.3% during the FY 2026-27, which is a sharp decline from the robust growth rate of 7.8 per cent year-on-year in the quarter ending in December 2025 (Q3 FY2025–26), […]

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