Rupee Gains 96 Paise Against Dollar After RBI Stabilisation Measures

The Indian rupee on Monday witnessed a sharp appreciation of 96 paise

to 95.77 per dollar on the central bank’s new currency-stabilisation

measures announced over the weekend.

At the foreign exchange market, the rupee opened at 95.76 per dollar.

It touched a low of 95.98 and a high of 95.58 before closing at 95.77,

a gain of 96 paise compared to its previous close of 96.73 per dollar.

Such a steep gain was seen on April 2 when the rupee had appreciated

by 166 paise against the greenback.

The Reserve Bank of India (RBI) on Saturday fired a bazooka of

measures to arrest the depreciating trends in rupee value. Firstly,

the RBI opened a direct dollar-supply window for three state-run OMCs

(Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat

Petroleum Corporation) shifting roughly $10-12 billion per month away

from the open spot market. The OMCs are among the largest buyers of

dollars in the Indian foreign exchange market because they need to pay

for crude oil imports. The direct dollar window facility came into

effect on October 12 and will remain in place until further notice.

The central bank also tightened rules governing forex derivatives

trades, aiming to curtail speculative bets against the rupee and asked

banks to create a 20 per cent reserve for dollar purchases of over $ 2

million. It capped the currency derivative position from $100 mn to

$5 mn and restricted corporates to rebook cancelled forward contracts.

Forex traders said that these measures have reduced immediate dollar

demand in the spot market and helped the rupee recover sharply despite

elevated crude prices, a still-firm Dollar Index and the fact that

foreign portfolio investors continue to remain sellers of Indian

assets. Foreign equity outflows have crossed ₹3 lakh crore in 2026.

The latest measures are the third phase of the RBI’s response to a

falling rupee this year. The March–April measures constrained banks’

onshore positions and onshore–offshore arbitrage. The subsequent

government and RBI initiatives sought to attract capital through tax

relief and wider access for foreign investors in government

securities, alongside FCNR(B) deposit and external borrowing

incentives. The latest measures focus on tightening hedging discipline

and relieving pressure on the regular dollar market.

Anindya Banerjee, Head Commodity and Currency Research, Kotak Neo

said, “With USD/INR around 95.81, our working range remains 94–97. We

expect the RBI to remain particularly vigilant on a move back towards

96.50, with the latest measures helping contain pressure around the

96–96.50 zone.”

“The recent retreat in crude is supportive, but sustained rupee

appreciation beyond 94 would require a more durable decline in oil

prices and an improvement in capital flows. Elevated oil prices, high

US yields and a strong dollar remain the key external headwinds. These

(RBI forex) measures can improve near-term market conditions and buy

time; a lasting appreciation trend will depend on those macro

pressures easing,” added Banerjee.

Said a forex consultant, “The RBI’s approach is certainly not a

sustainable approach. Firstly, it is important to recognize that

despite the huge “success” of the FCNR scheme, the usable reserves

(i.e., foreign currency assets) are now just $ 615 billion; deducting

RBI’s forward book (increased substantially by the swaps undertaken on

the FCNR inflows) of about $ 200 billion effectively brings it to

around $ 415 billion, which is just about 6 months imports. This would

classify our external account as quite “fragile”, which is likely to

further reduce India’s attractiveness to global investors.”

According to Soumya Kanti Ghosh, group chief economic advisor at SBI,

the government must seriously look into anchoring hot money flows into

the equity segment by extending the holding period to say 2-3 years

and abolishing the long term capital gains tax for equity.