The Reserve Bank of India announced a comprehensive package of measures today (10 October) to support the rupee as the currency trades perilously close to its record low.
The central bank will open a special window to meet the entire daily dollar requirements of three state-run oil marketing companies from Monday, while simultaneously tightening regulations on foreign exchange derivatives.
Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation will access dollars under the facility starting 12 October, with the RBI selling US currency directly through designated banks.
Under this arrangement, used during periods of acute currency strain, the central bank provides oil firms with dollars directly from its foreign exchange reserves rather than allowing them to purchase in the spot market, where their substantial demand typically creates volatility.
The rupee closed at 96.78 per dollar on Friday, barely changed from its previous session and hovering near its all-time weakest level of 96.96 touched in May.
The RBI has raised dollars and hiked its policy rate previously, yet pressure on the currency has persisted throughout 2026.
Alongside the oil company window, the Reserve Bank slashed the limit for positions in exchange-traded currency derivatives involving the rupee to $5 million from $100 million.
Forex dealers will not permit users to rebook any cancelled foreign exchange derivatives, the bank confirmed.
The central bank also mandated that forex dealers maintain a “foreign exchange risk reserve” equal to 20 per cent of the notional amount of each derivative contract involving the rupee.
Authorised dealers must now obtain and retain undertakings from users entering foreign exchange derivative contracts to confirm the same underlying exposure has not been hedged with another dealer.
Addressing oil companies’ dollar requirements removes one of the largest sources of demand from the foreign exchange market, which analysts suggest should help reduce volatility.
The rupee rallied in the non-deliverable forward market today, with the one-month dollar-rupee contract falling approximately 40 paise in thin trading.
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