The Reserve Bank of India will take the steps necessary to ensure orderly foreign-exchange trading but has no plans to impose capital controls, Governor Sanjay Malhotra told Moneycontrol in an interview published on Tuesday.

The central bank was “determined to do whatever is necessary to ensure orderly movement in the foreign exchange market”, Malhotra said, describing its recent measures as evidence of that commitment.

He said the restrictions were intended to curb speculative activity, not foreign investment. Capital-account transactions were excluded from the new foreign-exchange reserve requirement, and foreign portfolio investors could continue bringing money into India and withdrawing it.

The RBI tightened its rules after observing a high proportion of same-day cancellations and rebooking of currency contracts, Malhotra said. In some cases, about one-third of trades were closed or cancelled on the day they were entered into.

He said excessive speculation and one-sided positions had prompted the restrictions, while reiterating that the RBI did not target a particular exchange-rate level or trading band. Market forces would ultimately determine the rupee’s value.

The measures announced on October 10 reduced the threshold for derivative transactions without establishing an underlying exposure to $5 million from $100 million, prohibited rebooking of cancelled rupee derivative contracts and tightened documentation requirements.

The RBI also introduced a Foreign Exchange Risk Reserve requiring banks to hold cash equal to 20% of the rupee value of qualifying contracts above $2 million. The requirement covers derivatives used to hedge current-account exposures involving foreign-currency purchases.

A separate window, operational from October 12, supplies dollars to three state-run oil marketing companies, shifting their purchases away from the spot market.

Malhotra said markets appeared overly pessimistic about the rupee, while he remained optimistic about India’s medium- and long-term balance-of-payments outlook.

He cited strong remittances, resilient services exports and healthy foreign direct investment as support for the external account. Trade agreements, productivity measures and manufacturing reforms could further strengthen the economy, he said.

The rupee closed at 95.28 per dollar on Tuesday, compared with 95.77 on Monday, and 96.73 Friday.