RBI Steps In to Support Rupee, Tightens Forex Trading Rules
What Happened
RBI has opened a special dollar-supply window for three state-run oil marketing companies and tightened foreign-exchange derivative rules to ease pressure on the rupee. Under the facility, the RBI will directly provide dollars to oil companies, reducing their demand in the spot currency market. The central bank also lowered limits for certain forex derivative transactions and imposed stricter requirements on rupee-linked contracts.
Key Takeaways
The measures are aimed at curbing volatility and preventing further depreciation of the rupee, which closed at 96.73 per U.S. dollar on October 9 and remains close to its record low. While the steps may reduce near-term pressure on the currency, analysts say broader factors such as high crude oil prices, a strong dollar and weak capital flows continue to weigh on the rupee.