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RBI moves to defend rupee: dollar window for oil companies, tighter forex derivative rules
With the rupee near its all-time low, India's central bank unveiled fresh intervention measures: a dedicated dollar window for three state oil companies, a ban on rebooking cancelled rupee derivative contracts, and a cut in the no-underlying-exposure derivative threshold from $100M to $5M.
Why it matters
The RBI is deploying a rare two-pronged punch: a dollar window plus tighter derivatives. Oil companies are among the biggest dollar buyers in the spot market, so shifting their demand off-market directly eases depreciation pressure; the derivative curbs aim to close speculative channels for shorting the rupee.
Full story
The Reserve Bank of India announced a fresh round of currency-market intervention on Saturday, Oct 10, with the rupee closing Friday at 96.73 per dollar — within striking distance of its all-time low of 96.96 hit in May.
The centrepiece is a special dollar window for three state oil companies (Indian Oil, HPCL, BPCL): from Oct 12, the RBI will sell dollars directly to them through designated banks until further notice, removing their large dollar demand from the spot market.
Forex derivative rules were tightened at the same time: dealers are barred from letting clients rebook cancelled INR forex derivative contracts; the threshold for INR-linked derivative positions without underlying exposure was slashed from $100 million to $5 million (spot and exchange-traded); and a new 20% "Foreign Exchange Risk Reserve" applies to eligible derivatives above $2 million notional.
The rupee firmed slightly in thin Saturday NDF trading after the announcement, with the one-month contract down about 40 paise. This report states only verified facts and data; it makes no predictions about future exchange-rate moves.
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