Daijiworld Media Network - Mumbai
Mumbai, Oct 10: The Reserve Bank of India (RBI) on Saturday announced a series of measures to support the rupee, which is trading close to its all-time low, including a special window to meet the entire daily dollar requirements of three public sector oil marketing companies.
The three companies are Indian Oil Corporation Ltd (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL).
“On the basis of assessment of current market conditions, Reserve Bank of India has decided to open a special window to meet the entire daily dollar requirements of three public sector oil marketing companies,” the central bank said in a press release on Saturday.
Under the facility, the RBI will sell dollars to the three companies through designated banks. The arrangement will come into effect on October 12, 2026, and remain in place until further notice.
The central bank has also introduced regulatory measures for the foreign exchange market, including restrictions on the rebooking of cancelled foreign exchange derivative contracts involving the rupee.
“Authorised Dealers shall not permit users to rebook any foreign exchange derivative contract involving INR, whether deliverable or non-deliverable, which has been cancelled with any Authorised Dealer after the issuance of the Directions,” the RBI said.
However, the rollover of foreign exchange derivative contracts upon maturity will continue to be permitted.
The RBI has also reduced the threshold for undertaking foreign exchange derivative transactions without establishing an underlying exposure from $100 million to $5 million. The corresponding threshold for positions in exchange-traded currency derivatives involving the rupee has also been lowered to $5 million equivalent across all recognised stock exchanges.
In another measure, the central bank has introduced a Foreign Exchange Risk Reserve (FERR), requiring forex dealers to maintain a reserve equivalent to 20 per cent of the notional amount of each eligible derivative transaction involving the rupee.
The reserve will apply to foreign exchange derivative contracts undertaken to hedge current account exposures where users purchase foreign currency against the rupee, the RBI said.
The central bank said the measures were aimed at strengthening market discipline, ensuring appropriate risk management and maintaining an orderly and transparent foreign exchange market.
The rupee has faced sustained pressure since the West Asia conflict began in late February, depreciating around 6 per cent during the period. Over the past year, the Indian currency has fallen by more than 8 per cent.
The RBI has been intervening in the foreign exchange market to curb volatility. Meanwhile, India's foreign exchange reserves declined by around $51.1 billion in the four weeks ended October 2, after touching a record $785.7 billion in the week ended September 4.