The Reserve Bank of India said it will open a special window from Monday, October 12, to meet the full daily US-dollar requirements of Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum. Reuters and the Economic Times reported that the dollars will be supplied directly from the RBI’s foreign-exchange reserves, taking a major source of demand out of the spot currency market.
The RBI also said authorised dealers must not allow users to rebook cancelled foreign-exchange derivative contracts involving the rupee. The Economic Times reported that rollover at maturity remains permitted under existing rules. The limit for positions in exchange-traded rupee derivatives without establishing an underlying exposure was cut from $100 million to $5 million across recognised exchanges.
A new Foreign Exchange Risk Reserve applies to qualifying rupee derivative contracts with a notional value above $2 million. Authorised dealers must keep a cash reserve with the RBI equal to 20% of the rupee value of each eligible transaction. Dealers must also retain an undertaking that the same underlying exposure has not been hedged with another authorised dealer.
Reuters reported that the rupee closed on Friday at 96.73 per dollar, near its record low of 96.96 reached in May. The Economic Times said India’s foreign-exchange reserves fell by $12.95 billion to $734.60 billion in the week ended October 2, their fourth consecutive weekly decline. ANZ strategist Dhiraj Nim told Reuters that removing oil companies’ dollar demand should reduce volatility but would also be reflected in lower reserves.
These are currency-market and risk-management measures, not a new public exchange rate, deposit facility or direct payment to consumers. The reports establish the announced rules and the October 12 start date for the oil-company window; they do not establish how long the facility will remain open or guarantee that the rupee will strengthen. Asal Sach did not locate a separately accessible RBI primary release during this update, so the details are attributed to the two reports quoting the central bank.