RBI Tightens Rupee Derivatives Rules and Opens Oil-Company Dollar Window; Rupee Rebounds 91 Paise to 95.80

The Reserve Bank of India (RBI) announced a package of measures on Saturday, 10 October 2026, to curb speculation in the rupee derivatives market, and the rupee gained 91 paise to 95.80 against the US dollar in early trade on Monday, The Indian Express and The Hindu reported.

Quick Facts

Announced	10 October 2026 (circulars)
No-exposure threshold	Cut from $100 million to $5 million (a 95 per cent reduction)
Rebooking	Banned for cancelled rupee-linked forex derivative contracts; rollovers on maturity still allowed
New reserve	Foreign Exchange Risk Reserve (FERR)
Rupee, Monday early trade	95.80, up 91 paise (opened at 95.61)
Record closing low	96.88 (Thursday)

What the Measures Do

• Authorised dealers cannot let traders rebook cancelled rupee-linked forex derivative contracts
• The threshold for derivative transactions without establishing an underlying exposure falls to $5 million from $100 million, for banks and for exchange-traded currency derivatives
• Under the **FERR**, dealers must keep with the RBI, in cash, 20 per cent of the rupee equivalent of the notional amount of each rupee-linked derivative contract above $2 million, where it hedges the purchase of foreign currency for current account exposures
• A dedicated dollar window for oil marketing companies through designated banks, to reduce dollar demand in the spot market

The RBI said the aim is “strengthening market discipline and ensuring appropriate risk management while maintaining an orderly and transparent foreign exchange market”.

The Backdrop

The Indian Express reported that crude oil is above $100 a barrel and the rupee had been moving close to 97. Forex reserves fell by $12.95 billion to $734.60 billion in the week ended 2 October, even though more than $143 billion has come in under the FCNR scheme.

The RBI raised the repo rate by 25 basis points to 5.50 per cent on 7 October. The Indian Express noted that retail inflation is forecast to touch 5.2 per cent in 2026-27.

Market Impact

The rupee closed Friday at 96.71, after the record closing low of 96.88 on Thursday. The dollar index was marginally lower at 101.94 on Monday. Analysts told The Hindu the measures should help the currency withstand pressure from high crude prices and a strong dollar.

Featured image: The Reserve Bank of India’s office in Delhi (file photo). Photo by Pinakpani, licensed under CC BY-SA 4.0, via Wikimedia Commons.