Business · Mumbai
RBI Tightens Forex Rules to Support Rupee
In brief
The Reserve Bank of India announced fresh steps on Saturday to ease pressure on the rupee, including a special dollar window for state oil companies and tighter rules on forex derivatives. The currency has fallen more than 7% against the dollar this year amid high oil prices.
According to CNBC and The Economic Times, the RBI will sell dollars to Bharat Petroleum, Hindustan Petroleum and Indian Oil through designated banks from October 12, keeping that demand out of the open spot market. Dealers must also hold a 20% foreign-exchange risk reserve on large derivative hedges above $2 million notional.
The limit for derivative hedges without proof of underlying exposure was cut to $5 million from $100 million across products. After the announcement, the rupee firmed about 0.6% in thin non-deliverable forward trading.
Analysts said the package should cool speculative dollar demand but will not remove the deeper drivers of oil costs and capital flows. Our currency converter can show mid-market reference rates only; it is not trading advice.
Why it matters
A weaker rupee raises import costs for fuel and goods, so central-bank steps matter for businesses and households across India.
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Sources
- CNBC: India unveils tough curbs on dollar demand to defend rupee
- The Economic Times: RBI steps in to support rupee as currency nears record low; tightens forex rules
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