RBI opens dollar window for oil firms from Oct 12, tightens forex derivative rules

The Reserve Bank of India (RBI) has announced that it will open a special window from Monday, October 12, to meet the daily dollar needs of the three state-run oil marketing companies: Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL). Under the arrangement, the RBI will sell dollars to the companies through designated banks, and the window will stay open until further notice. The central bank also tightened rules on foreign exchange derivatives, revising the limit on derivative exposure across all authorised dealers and barring dealers from letting users rebook forex derivative contracts that have been cancelled. The measures, reported on October 10, 2026, come as the rupee trades near its record low; it closed at 96.73 to the dollar on Friday.

India imports most of the crude oil it uses, and the oil companies are among the biggest buyers of dollars in the currency market. With crude prices near $100 a barrel, their daily dollar purchases have added to pressure on the rupee. By selling dollars to them directly, outside the open market, the RBI removes a large and predictable source of demand from the market. That can steady the exchange rate without the central bank having to sell dollars in the open market every day.

The derivative rules target a different source of pressure. Banning the rebooking of cancelled contracts and limiting exposure make it harder for traders and companies to take short-term positions that bet on a weaker rupee. Together, the measures are meant to reduce speculation and give the RBI more control over the currency's path.

The move follows a difficult stretch. The RBI raised its policy repo rate by 25 basis points to 5.50% this week, and India's foreign exchange reserves have fallen for four straight weeks, dropping by $12.95 billion to $734.61 billion in the week ended October 2 as the central bank sold dollars to defend the rupee. Reserves are still about $43.5 billion higher than at the end of March, which gives the RBI room to act, but it cannot keep spending at that pace for long.

For households and businesses, a weaker rupee makes imports such as fuel, electronics and foreign education more expensive and adds to inflation. A steadier rupee helps keep those costs in check. The risk is that the window delays, rather than solves, the underlying problem of high oil prices.

Short-term: Demand for dollars in the open market should ease from October 12, which may help the rupee hold above its record low.

Long-term: The measures buy time, but the rupee's path will depend on oil prices, foreign investment flows and how long the RBI can keep supporting the currency from its reserves.

Who is affected: State-run oil companies, banks and forex dealers, importers and exporters, foreign investors, and households facing fuel and import costs.

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