In the calendar year 2026 the Indian rupee slipped 7 percent, and in the fiscal year that began in April it was down another 3.5 percent. High crude‑oil prices, a strong US dollar and foreign‑capital outflows have put pressure on the rupee.
The Reserve Bank of India has a precedent for stepping in when the rupee’s trajectory threatens broader stability. In 2013, the so‑called taper tantrum saw a sudden reversal of capital flows into emerging markets, prompting the RBI to intervene aggressively. The latest measures, announced in early October, have been described as the strongest steps to support the forex market since that 2013 episode.
On 10 October 2026 the RBI announced a dramatic tightening of rules governing foreign‑exchange derivative transactions that lack an underlying exposure. Previously, market participants could hold unhedged positions up to $100 million. The new limit slashes that ceiling to just $5 million – a reduction of 95 percent. This move aims to curb speculative bets that can amplify price swings without any real trade‑backing.
This move aims to curb speculative bets that can amplify price swings without any real trade‑backing.
The RBI’s package also carved out a special arrangement for the three state‑run oil companies – Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL). Rather than sourcing dollars on the spot market, these firms can now obtain foreign currency directly through designated banks under a dedicated dollar window. This move aims to ease pressure on the rupee and provide a predictable supply line for the entities that import the bulk of India’s crude.
Alongside the derivative cap and the oil‑company window, the RBI unveiled a new mechanism called the Foreign Exchange Risk Reserve (FERR). The reserve is intended as an additional buffer to absorb sudden spikes in dollar demand.
Following the October 12 announcements, the rupee opened at 95.76 per US dollar on Monday, up from the previous Friday’s closing level of 96.73 – a strengthening of roughly one percent. The rupee also strengthened in offshore trading, and the non‑deliverable forward (NDF) market was trading at 94.17 per dollar.
The RBI’s policy rate – the repo rate – sits at 5.5 percent.