Overview
- The Reserve Bank of India unveiled a package over the weekend that includes a dedicated dollar window for public oil marketing companies and stricter rules on rupee-linked derivatives, and markets saw the rupee strengthen across Monday to Wednesday to roughly 94.9–95.4 per dollar.
- The oil window is expected to shift about $10–12 billion of monthly import dollar demand away from the spot market by letting state refiners source dollars through designated banks.
- Regulatory steps require banks to hold a 20% reserve on certain dollar purchases above $2 million and ban rebooking of cancelled INR derivative contracts to make speculative positions costlier and harder to roll.
- Traders and multiple reports say the RBI supplemented the rules with probable spot-market dollar sales and banks trimmed non-deliverable forward positions, which together triggered rapid unwinding of short rupee bets.
- Officials warned the improvement may be temporary because sustained pressure from high crude prices and large foreign portfolio outflows will determine the rupee’s path and further measures remain possible.