India unveils tough curbs on dollar demand to defend rupee
The central bank will meet the full daily dollar needs of three state-run oil firms and raise hedging costs for large rupee derivative trades.
- On Saturday, the Reserve Bank of India announced a special dollar window for Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited, effective Monday, October 12, 2026.
- Persistent pressure on the rupee, which has declined more than 7% this year, combined with crude oil prices surging above $100 a barrel, prompted the central bank to redirect oil companies' dollar purchases away from the spot market.
- The three companies require about $300 million daily to import crude oil, while the RBI mandated that forex dealers maintain a 20% "foreign exchange risk reserve" on derivative contracts to curb speculative activity.
- Addressing these requirements removes a major demand source from the market, though it will deplete foreign exchange reserves, which currently stand at about $735 billion, said Dhiraj Nim, FX strategist at ANZ Bank.
- While the facility remains open until further notice, underlying drivers including oil prices and capital flows persist. "The real test will be how reserves and the rupee behave in the coming week," Nim added.
43 Articles
43 Articles
The Central Bank of India imposed new restrictions to reduce demand for dollars and support for rupees, including providing currency to government oil companies from reserves and tightening hedge rules, amid currency decline of more than 7% since the beginning of the year.
The Reserve Bank of India has announced several measures to support the rupee, including allowing oil companies to sell dollars through a special window and tightening rules for foreign exchange derivatives.
Reserve Bank of India Opens Special Dollar Window for State-run Oil Marketing Companies
Get latest articles and stories on Business at LatestLY. The Reserve Bank of India (RBI) opens a designated foreign exchange window to fulfill the complete daily dollar requirements of state-run oil refiners, according to an official statement issued by the central bank. Business News | Reserve Bank of India Opens Special Dollar Window for State-run Oil Marketing Companies.
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