RBI takes steps to choke speculative bets against the rupee in forex market

MUMBAI: RBI said on Saturday it would sell dollars directly to IOC, HPCL and BPCL to meet their crude import needs, as part of measures to curb rupee volatility. It also imposed a 20% cash reserve on banks for dollar purchases exceeding $2 million. Additionally banks must seek additional documentation of underlying exposure for extending rupee derivative contracts to clients.The tightened rules on forex derivatives aim to curb speculative positions, duplicate hedging and aggressive dollar buying. RBI’s weekend notification comes after India’s foreign exchange reserves fell by $51.1 billion from a record $785.71 billion in the week ended Sept 4 to $734.60 billion in the week ended Oct 2. The rupee has faced pressure from rising crude oil prices amid West Asian conflicts, foreign investor outflows from Indian equities and bonds, higher US Treasury yields and a stronger dollar amid global risk aversion. A big chunk of the reserve accretion, which followed the record mop up of $127 bn through FCNR(B) deposits.The measures bar traders from rebooking cancelled contracts, cut the limit for trading without proof of underlying exposure from $100 million to $5 million, require undertakings against duplicate hedging.The targeted dollar-sale window is the first such facility for the three state-run oil marketing companies since Aug 2013, when RBI opened a forex swap window during the “taper tantrum” to meet their entire daily dollar needs. The companies then required around $8 billion to $8.5 billion a month for crude imports. Unlike the earlier arrangement, which involved RBI buying back dollars at a future date, the new facility involves direct sales.The intervention aims to divert predictable oil-import demand from the open market, where it can amplify pressure from corporate and portfolio outflows. India’s crude import bill fell to $121.8 billion in FY26 from $137.2 billion in FY25, according, despite crude imports rising marginally to 245.3 million tonnes. Different trade classifications put crude petroleum imports at $134.7 billion and the net oil and gas import bill at $117.5 billion.You use AI every day. Now get your AI Quotient. Take the AIQ test.