Industry Odisha Bureau, Oct 12: The RBI will supply dollars directly to state-run oil firms and curb currency bets. Analysts see near-term gains for the rupee. Costly crude, capital outflows and weak external balances still weigh.
The Reserve Bank of India will now supply dollars directly to state-run oil companies. The arrangement starts on 12 October, alongside tighter curbs on speculative currency trades. The Indian rupee ended Friday at ₹96.73 per dollar, near May’s ₹96.96 record low. A higher figure signals a weaker rupee. Bloomberg data show losses of nearly 8% this calendar year and 11% in FY26. The steps may offer short-term support, but deeper depreciation drivers persist.
Indian Oil, Hindustan Petroleum and Bharat Petroleum will draw dollars through a special RBI window. The central bank will meet their entire daily dollar needs via designated banks. Their large purchases will stay out of the spot market. The demand itself remains; only its source changes.
A separate circular tightens derivative rules, since speculative bets can deepen selling pressure. Cancelled rupee-linked contracts can no longer be rebooked. The limit for derivative deals without underlying exposure falls to $5 million from $100 million. Clients must also confirm the same exposure is not hedged with another authorised dealer. Under a new Foreign Exchange Risk Reserve, banks must keep cash with the RBI. The sum equals 20% of qualifying contracts’ rupee value. It covers current-account hedges above $2 million where clients buy foreign currency.
Emkay Global Financial Services estimates the steps could lift the rupee about 1% on Monday. ANZ strategist Dhiraj Nim sees a strong early rally in spot trading. He says forward premiums could drop by 50 basis points or more. Yet he argues the measures mainly buy the central bank time.
Gaura Sengupta of IDFC FIRST Bank still expects medium-term depreciation. She points to multi-year high US Treasury yields and crude near $100 a barrel. Firmer RBI action, she suggested, may only soften the pace. India imports about 90% of its crude oil needs. Costlier oil lifts dollar demand and can weaken the rupee. A weaker rupee makes imports dearer. Over time, that can feed inflation, raise business costs and squeeze households.
July’s balance of payments surplus jumped to $20.9 billion from $2.9 billion in June. This came largely from FCNR(B) foreign-currency deposits placed in Indian banks by non-resident Indians. Stripping out NRI deposits, July showed a $12.7 billion deficit. That reflects thin capital inflows, especially weak foreign portfolio investment. Three RBI windows drew $143.6 billion by 18 September, with FCNR(B) deposits supplying 93%. Foreign-exchange reserves stood at $765 billion that day. They fell to $734 billion by 2 October, likely reflecting RBI intervention. Nim expects markets to track reserves more closely under the new oil window.
Importers have been raising hedges, while exporters wait for further rupee weakness. Hedging is not barred, but banks may pass extra costs to importers. Mecklai Financial Services’ Ritesh Bhansali notes the curbs mainly affect thinner onshore trading. Foreign investors and banks can still trade in the larger offshore market. He sees ₹95.50–96 by financial year-end, while Nim expects ₹97.50 over six to 12 months. Unless external balances improve, the relief may prove temporary.
