- RBI introduces five measures to support the rupee against the US dollar.
- New rules tighten forex trading and increase costs for certain large derivative trades.
- RBI aims to curb speculative trading and reduce unnecessary dollar demand.
The Indian rupee is still under pressure against the US dollar, and the Reserve Bank of India (RBI) is now taking necessary steps to strengthen the currency. The central bank has reportedly announced five measures to support the rupee and tighten control over dollar trading.
RBI to Strengthen the Rupee with Five New Measures
According to the latest reports, the Reserve Bank of India has launched five measures to reduce the prevailing pressure surrounding the rupee. The RBI is also looking to manage dollar demand. The new measures include supplying dollars directly to major public sector oil companies and tightening rules for currency derivative trading.
The bank has also changed limits on certain forex traders, with contract cancellation and rebooking facing new restrictions. Together, these changes intend to curb speculative trading and support the rupee.
RBI to Supply Dollar Directly to Oil Companies
Reports claim that the RBI will directly meet the daily dollar needs of three major public sector oil companies from October 12, 2026. These companies include Indian Oil Corporation (IOC), Hindustan Petroleum (HPCL), and Bharat Petroleum (BPCL). The RBI will supply the required dollars through designated banks. Thus, the move could reduce the need for oil companies to buy dollars from the market, easing demand for the US currency.
Large Dollar Trades are Becoming More Expensive for Banks
In addition to the dollar supply, the central bank has also introduced a new rule focusing on large derivative trades. The rule intends to increase the cost of certain large derivative trades. For rupee derivatives trades worth more than $2 million, banks are required to keep 20% of the rupee value as a cash reserve with the RBI. This move could make large dollar-buying trades more expensive and discourage excessive trading in the foreign exchange market.
Limit for Forex Trades without Proof of Need Reduced
Moreover, the RBI has also reduced the limit for currency trades that could be made without proving an actual foreign exchange need from $100 million to $5 million. The limit applies to both over-the-counter (OTC) and exchange-traded currency derivatives. Thus, speculative trading could be limited. The move could also ensure that large forex traders are backed by a genuine need for foreign currency.
Cancellation and Rebooking of Forex Trades
Another major rule includes restrictions on cancelling and rebooking rupee-related foreign exchange trades. The new rules restrict traders from entering the same contract that was earlier cancelled. Instead, they can extend contracts when they reach maturity. With these new rules, the RBI aims to control repeated trading on the same currency exposure. The ultimate vision is to limit speculative activity in the forex market.
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Finally, the central bank has also launched a rule that requires traders to confirm that they have not hedged the same currency exposure elsewhere. This means that traders cannot use the same foreign exchange requirement to justify multiple hedging contracts. RBI is taking the initiative to prevent duplicate hedging and reduce unwanted trading in the market.
Related: India-US Trade Talks Stall: What the Deadlock Means for Indian Businesses, Investors and the Rupee
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