Business · Markets · 3 hrs ago
India opens dollar window for oil companies to support the rupee
India’s central bank has announced steps to ease pressure on the rupee, which is close to its weakest level on record.
The measures include a special dollar-supply window for Indian Oil, Hindustan Petroleum and Bharat Petroleum, starting Monday.
These state-run companies need dollars to pay for oil, and meeting some of that demand directly could reduce pressure on the currency market.
The rupee closed at 96.73 to the dollar on Friday, near its record low of 96.96, reached in May.
The Reserve Bank of India is also restricting some currency trades and requiring dealers to hold a reserve against rupee-related derivative contracts.
The steps aim to curb market demand and volatility, but supplying dollars from the central bank’s reserves will use up some of those reserves.
The measures take effect from Monday for the oil companies.
The Reserve Bank of India announced measures to support the rupee, including a special dollar window for three state-run oil companies.
The facility is intended to meet the companies’ daily dollar needs and ease pressure on the foreign-exchange market.
The RBI also tightened currency-derivative rules, including a 20% cash reserve requirement for certain transactions and a lower threshold for some contracts.
The measures came as the rupee traded near its record low amid foreign capital outflows and higher fuel prices.
Bankers said the new requirements could make it harder and more expensive for importers to hedge currency exposure.
- Who
- The Reserve Bank of India announced the measures. The dollar window is for Indian Oil, Hindustan Petroleum and Bharat Petroleum.
- What
- The RBI opened a special dollar window for the oil companies and tightened foreign-exchange derivative rules.
- When
- The measures were announced on Saturday, October 10, 2026. The oil companies were to be allowed access to the facility from Monday.
- Where
- India.
- Why
- The RBI said the measures aim to support the rupee, reduce foreign-exchange market demand and volatility, and strengthen market discipline.
Reserve Bank of India
Critical bankers
Purpose
Reserve Bank of India
The RBI said its measures aim to support an orderly and transparent foreign-exchange market.
Critical bankers
Bankers said the restrictions could curtail market activity and make it difficult for importers to hedge.
Effect on importers
Reserve Bank of India
The measures are intended to curb speculative dollar demand, according to treasury head Ashhish Vaidya.
Critical bankers
Anshul Chandak said the 20% cash requirement would make hedging expensive and add to importers’ working-capital needs.
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 20% levy will make it more expensive to hedge large dollar transactions and could reduce dollar/rupee premiums.
This additional cash requirement means buying dollars for importers becomes not only very expensive but also heavy on working capital requirements
Addressing oil companies' dollar requirements removes one of the largest sources of demand from the FX market, which should help reduce volatility but it will show up in a depletion of reserves
The rupee closed at 96.73 per dollar, near its record low.
The RBI announced a special dollar window for three state-run oil companies and tightened foreign-exchange rules.
Indian Oil, Hindustan Petroleum and Bharat Petroleum were to be allowed access to dollars under the facility.
- Rupee close
- 96.73 per dollar on Friday
- Record low
- 96.96 per dollar, reached in May
- Oil companies
- Indian Oil, Hindustan Petroleum and Bharat Petroleum
- Derivative threshold
- Reduced to $5 million from $100 million
- Cash reserve requirement
- 20% for certain rupee derivative transactions
Sources
RBI's rupee defence may drain banking liquidity, ease currency pressure
RBI's rupee-defence measures may offer near-term relief, say analysts
RBI steps in to support rupee as currency nears record low; tightens forex rules
Reserve Bank of India takes steps to support rupee, opens dollar window for oil companies
India central bank takes steps to support rupee, opens dollar window for oil companies
RBI Announces Special Oil Window, Regulatory Steps for Rupee
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