India has introduced new measures to bolster the Indian Rupee (INR), which is trading near record lows, by redirecting oil companies' US Dollar purchases away from the spot market and tightening hedging rules, according to Reuters [1]. The Reserve Bank of India (RBI) announced that it will establish a special window to meet the daily dollar requirements of three state-run oil-marketing companies—Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation—starting Monday [1]. This mechanism, previously used during periods of currency volatility, allows the RBI to supply dollars directly to these oil companies from its foreign exchange reserves, thereby reducing pressure on the spot market [1].
The move comes as the INR faces persistent pressure due to rising oil prices and higher global bond yields [1]. At the time of reporting, the USD/INR pair was down 0.02% on the day at 96.77, indicating a slight strengthening of the Rupee following the announcement [1].
The RBI's intervention is part of its broader mandate to maintain price stability and manage exchange rate volatility, especially given India's reliance on foreign trade and oil imports [1]. The central bank actively intervenes in FX markets to keep the exchange rate within a limited range, using both spot market operations and derivatives [1].
No forward-looking statements or analyst opinions were provided in the article.
CONCLUSION
India's latest measures to support the Rupee involve direct intervention by the RBI to supply US Dollars to major state-run oil companies, aiming to ease pressure on the spot market. The immediate market reaction was a marginal strengthening of the INR. The RBI's actions underscore its commitment to maintaining currency stability amid external pressures.