EconomyRupee
Rupee near 97 per dollar with crude above $100; RBI opens dollar window for oil firms
The RBI will meet the full daily dollar needs of three state-run oil companies from 12 October and has tightened rules on currency hedging, after reserves fell for four straight weeks.
Key points
- The rupee closed at 96.72 per dollar (provisional) on 9 October, after 96.88 the day before; Brent crude futures were at $102.95.
- From 12 October the RBI will sell dollars directly to Indian Oil, HPCL and BPCL through designated banks, until further notice.
- It has cut the limit for hedging without proof of underlying exposure from $100 million to $5 million and created a Foreign Exchange Risk Reserve.
- Forex reserves fell to $734.6 billion in the week ended 2 October, $51.1 billion below the record of early September.
The rupee ended the week near 97 to the dollar. It closed at a provisional 96.72 on Friday, 9 October, up 16 paise from 96.88 on Thursday, according to PTI. Brent crude futures traded at $102.95 a barrel that day.
A day later, on Saturday, the Reserve Bank of India announced two sets of measures to ease pressure on the currency.
A dollar window for oil companies
The RBI will sell dollars to meet “the entire daily dollar requirements” of three state-run oil marketing companies: Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum. The sales will go through one or more designated banks, starting Monday, 12 October.
The facility “will remain in place until further notice”. The RBI said the decision was based on its assessment of current market conditions. The window takes the oil companies’ import demand out of the spot market, National Herald reported.
Tighter rules on hedging
In two circulars issued the same day, the RBI also tightened rules for currency derivatives involving the rupee.
RBI's forex market measures, 10 October 2026
- $5 millionnew limit for hedging without proof of underlying exposure (was $100 million)
- 20%Foreign Exchange Risk Reserve, as cash with RBI, on eligible contracts above $2 million
- No rebookingof cancelled rupee derivative contracts
Users can no longer rebook a rupee derivative contract once it has been cancelled, though rollovers at maturity are allowed. The limit for hedging without documented exposure falls from $100 million to $5 million, both with banks and on stock exchanges.
Banks must also keep a new Foreign Exchange Risk Reserve with the RBI in cash. It equals 20% of the notional value of contracts above $2 million where a user buys foreign currency against rupees to hedge current account exposures. The RBI said the measures aim “to ensure orderly functioning of the foreign exchange market”.
The oil link
Business Standard has tied the rupee’s slide this year to oil prices and foreign investor selling. On 30 April, when Brent touched $126 a barrel, its highest since June 2022, the rupee hit a then-record low of 95.32, Business Standard reported. Foreign investors had pulled more than $20 billion out of Indian markets in 2026 by then.
Higher oil prices raise India’s import bill, widen the current account deficit and add to importers’ demand for dollars, Business Standard noted. The rupee has lost 1.62% against the dollar since early September, according to Business Standard. Foreign institutional investors sold equities worth ₹12,943.58 crore on 8 October alone, PTI reported.
The Indian rupee appreciated after three days of weakness, strengthening against the US dollar
Parmar said he expects resistance near 97 and support at 95.30 in the near term.
Reserves are falling
India’s foreign exchange reserves fell $12.95 billion to $734.6 billion in the week ended 2 October, the fourth weekly decline in a row. They are $51.1 billion below the record $785.7 billion of the week ended 4 September. The week ended 25 September saw a record weekly fall of $18.3 billion.
Market participants estimate the RBI sold about $30 billion, net, in September, Business Standard reported. Gaura Sen Gupta, chief economist at IDFC FIRST Bank, put the RBI’s sales at about $7.5 billion in the latest reported week, with valuation changes accounting for most of the rest of the fall.
Reserves had been rebuilt over the summer through a concessional swap window for FCNR(B) deposits, which opened on 8 June and closed on 31 August. It brought in $143.6 billion by 18 September, of which $132.98 billion came from FCNR(B) deposits.
The RBI raised its repo rate to 5.50% on 7 October, citing the West Asia conflict and volatile crude prices among the risks to inflation.
The documents
- RBI announces special window for Public Sector Oil Marketing Companies to meet dollar requirementsReserve Bank of India, 10 October 2026
- RBI Announces Regulatory Measures for the Foreign Exchange MarketReserve Bank of India, 10 October 2026