Updated: October 13, 2026

The Reserve Bank of India (RBI) has introduced a series of foreign-exchange measures to ease pressure on the rupee, including a dedicated dollar facility for state-run oil companies and tighter rules for rupee-linked derivatives. The steps have helped the currency recover from recent lows, but implementation questions have disrupted parts of the market.

What changed on October 13

Reuters reported on October 13 that at least eight large lenders temporarily held back from quoting dollar-rupee forward contracts as they assessed the scope of new reserve requirements. According to bankers cited by Reuters, the uncertainty followed a rule requiring banks to maintain a Foreign Exchange Risk Reserve for qualifying rupee derivative contracts used to hedge their own assets and liabilities.

A person familiar with the RBI’s thinking told Reuters that the market’s interpretation was too broad: transactions undertaken for market-making or trading were outside the circular’s scope. Three of the eight banks had resumed quoting forwards after bilateral clarification, while other dealers were waiting for formal communication. Reuters reported that lower onshore forward activity and wider bid-ask spreads accompanied the uncertainty.

How the measures work

The RBI has routed dollar demand from Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation through a special facility. It has also tightened the permitted use of certain non-deliverable rupee derivative contracts and expanded a cash reserve requirement for qualifying hedges. The measures are intended to manage dollar demand and discourage excessive speculative positions, but they can also affect hedging costs and market liquidity.

What businesses and markets should watch

  • Formal RBI clarification or FAQs on which contracts are covered by the reserve requirement.
  • Whether banks resume normal quoting in the onshore forward market.
  • Changes in rupee volatility, crude-oil prices and foreign capital flows.
  • Potential effects on importers, exporters and companies that hedge foreign-currency exposure.

The near-term currency response should not be confused with a resolution of the underlying pressures. Oil prices, capital flows and demand for dollars remain important factors. This article is for general information and is not investment advice.

Sources

Reporting note: Market conditions and RBI guidance can change quickly. Check the latest official RBI communications and your bank’s advice before making hedging decisions.