From mint · Subhana Shaikh · · 2m
Rupee rebound expected with RBI measures
RBI curbs boost rupee short-term but depreciation pressure lingers.
In brief
RBI curbs boost rupee short-term but depreciation pressure lingers. RBI's dollar supply to oil companies and tighter forex rules may lift rupee 1% Monday, but high oil prices and capital outflows threaten longer-term depreciation. Originally reported by mint.
RBI moves to support rupee
The RBI announced a dedicated window for dollar deposits to state-run oil companies on 5 June to attract inflows and support the rupee.
Rupee near record low
The rupee closed at 96.73 per dollar on Friday, near its record low of 96.96 in May, having depreciated 8% this calendar year and 11% in FY26.
RBI tightens forex rules
The RBI will supply dollars directly to three state-run oil companies and tighten rules on currency derivatives to curb speculative trades.
Short-term rupee boost expected
Emkay Global Financial Services expects the rupee to rise 1% on Monday due to RBI's measures.
Long-term depreciation risks
High crude oil prices, capital outflows, and weak external balances will continue to pressure the rupee long-term.
Economist warns on medium term
IDFC FIRST Bank's chief economist Gaura Sengupta says the rupee will still depreciate due to multi-year high US Treasury yields and crude oil at $100.
RBI introduces FERR
The RBI created a Foreign Exchange Risk Reserve (FERR) requiring banks to maintain 20% cash reserves for derivative contracts exceeding $2 million.
Market reactions to measures
Importers are increasing hedging while exporters hold back expecting further rupee depreciation.
Forex measures curb speculation
The RBI barred rebooking of cancelled derivative contracts and lowered the threshold for derivative transactions without underlying exposure.
RBI reserves impact
Foreign exchange reserves rose to $765 billion on 18 September but fell to $734 billion by 2 October amid RBI intervention.
RBI's window for deposits
The RBI's dedicated window for FCNR(B) deposits closed ahead of schedule on 31 August, attracting $143.6 billion in inflows.
The key point
RBI's dollar supply to oil companies and tighter forex rules may lift rupee 1% Monday, but high oil prices and capital outflows threaten longer-term depreciation.
