Business · Markets · 21 hrs ago
RBI tightens forex rules as rupee nears record low
The Reserve Bank of India has tightened rules for foreign exchange derivatives, contracts that help businesses manage currency risks.
The measures are intended to curb demand for dollars and support the rupee, which closed at 96.73 per dollar, close to its record low.
The rupee has lost about 7% this year amid foreign capital outflows and rising fuel prices.
The RBI lowered the limit for certain trades that can be made without showing an underlying business need, from $100 million to $5 million.
It also restricted the rebooking of cancelled rupee contracts and required banks to hold cash equal to 20% of the rupee value of contracts above $2 million.
The central bank set up a special window to meet the daily dollar needs of three state-run oil companies: BPCL, HPCL and IndianOil.
Some bankers warn that the rules could make it harder for importers to hedge currency risks and reduce market activity, while the RBI says they are meant to support orderly trading.
The Reserve Bank of India tightened foreign exchange derivative rules on Saturday to curb pressure on the rupee.
The measures lower transaction limits, tighten documentation requirements and restrict rebooking of cancelled contracts.
The rupee closed at 96.73 per dollar on Friday, near its all-time low of 96.82.
The RBI also introduced a 20% cash reserve requirement for certain contracts and a special window for three public sector oil companies to meet daily dollar needs.
Some bankers warned the measures could restrict hedging and market activity, while a DBS Bank executive said they could reduce dollar demand and support the rupee.
- Who
- The Reserve Bank of India introduced the measures.
- What
- It tightened foreign exchange derivative rules, including transaction limits and documentation requirements.
- When
- Saturday. The article was published on October 11, 2026.
- Where
- India’s foreign exchange market.
- Why
- To curb pressure on the rupee and strengthen market discipline and risk management.
The Reserve Bank of India
Some bankers
Purpose and effect
The Reserve Bank of India
The RBI said the measures would strengthen market discipline and support an orderly, transparent market.
Some bankers
Some bankers said the restrictions could curb market activity and distort the rupee’s market-determined value.
Hedging and currency demand
The Reserve Bank of India
A DBS Bank executive said the measures could make large dollar transactions more expensive to hedge, reduce dollar demand and support the rupee.
Some bankers
Some bankers said the 20% levy could make it almost impossible for importers to hedge and could lead to a collapse in forward premiums.
The measures are intended to strengthen market discipline and ensure appropriate risk management in the foreign exchange market, while maintaining an orderly and transparent market environment
The measures are intended to curb speculative dollar demand, particularly from importers.
The 20% levy will make it more expensive to hedge large dollar transactions and could reduce dollar/rupee premiums.
The rupee touched a record intraday low of 96.96 per dollar.
The rupee closed at 96.73 per dollar, near its all-time low of 96.82.
The RBI tightened foreign exchange derivative rules and announced a special window for three public sector oil companies.
- Rupee close
- 96.73 per dollar on Friday
- All-time low at close
- 96.82 per dollar
- Record intraday low
- 96.96 per dollar in May
- Cash reserve requirement
- 20% for forex derivative contracts above $2 million
- Exposure threshold
- Cut from $100 million to $5 million
- Oil companies covered
- BPCL, HPCL and IndianOil
Sources
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