RBI Tightens Forex Rules as Rupee Rebounds to 95.28 per Dollar

The Reserve Bank of India has introduced six forex measures since Saturday, and the rupee recovered to 95.28 per dollar, gaining about 150 paise over two days, according to The Economic Times. The steps aim to curb speculative bets and ease pressure on the currency.

One measure requires banks to set aside a 20% cash reserve against large forex derivatives contracts above $2 million. RBI extended the restriction Monday to rupee non-deliverable contracts with non-resident customers, for hedging purposes. Experts said the cost could raise importers’ hedging expenses by at least 150 basis points.

The central bank also cut the transaction threshold for foreign exchange derivatives from $100 million to $5 million across authorised dealers. Banks cannot let users rebook cancelled rupee derivative contracts, though contracts may still be rolled over at maturity. They must also obtain and retain additional documents verifying underlying exposures.

A temporary dollar window will meet the daily needs of Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp. RBI will use its own dollar stockpile, reducing the retailers’ demand in the spot market.

Economists described the measures as tactical support, not a structural fix for lasting rupee stability. They said defending the currency amid geopolitical headwinds would involve policy trade-offs and pointed to the need for broader reforms to encourage stable, long-term foreign capital inflows.