On Saturday, the Reserve Bank of India (RBI) announced new strategies to support the rupee, which has fallen over 7% this year due to high oil prices and increasing global bond yields.
The RBI will establish a special window for three state-run oil companies—Indian Oil, Hindustan Petroleum, and Bharat Petroleum—to directly access dollars from its foreign exchange reserves, thereby reducing demand in the spot market. This move is expected to stabilize the rupee, which saw a 0.6% increase against the dollar in the non-deliverable forward market following the announcement.
Additionally, the RBI is tightening hedging rules to curb speculative corporate activity, mandating a 20% foreign exchange risk reserve on derivative contracts exceeding $2 million. This is intended to discourage excessive hedging and improve the verification of underlying exposures.
Despite these measures, analysts, including Dhiraj Nim from ANZ Bank, caution that the underlying pressures from oil prices and capital flows remain, and the effectiveness of these interventions will be tested in the coming weeks