According to Nomura, the RBI has a host of options to protect the rupee and shore up reserves. These include:
Hiking rates and tightening liquidity.
Raising custom duties on imports and offering exports sops.
Announcing measures to boost capital inflows, such as liberalising foreign direct investment and external commercial borrowing norms.
Raising NRI or foreign-currency denominated bonds.
Curbing capital outflows by placing restrictions on outward remittances and investment.
Nomura believes that if the currency pressures persist, the RBI will likely hike rates before considering issuing any NRI bonds.