Rupee Recovers To 94.96 Against Dollar As RBI Tightens Forex Rules

The rupee strengthened by 82 paise to 94.96 against the dollar on October 13, 2026, gaining nearly 0.70 per cent from its previous close. The recovery came after the domestic currency touched a record low of 96.96 against the dollar in May.

Union Minister of Finance Nirmala Sitharaman acknowledged the significant depreciation over recent months and attributed much of the decline to global challenges. The Reserve Bank of India (RBI) has also introduced a series of measures to regulate foreign exchange transactions – manage dollar demand and address volatility in the currency market.

The measures come as demand for dollars from importers put pressure on the rupee, while exporters have been less active in selling their dollar earnings. The central bank has tightened rules governing currency derivatives and also introduced specific arrangements to meet the foreign exchange needs of oil marketing companies.

RBI Introduces Five Measures To Regulate Forex Transactions

The RBI has restricted the cancellation and rebooking of foreign exchange derivative contracts involving the rupee. These contracts let businesses manage the risk of currency movements when making international payments or receiving overseas earnings.

The RBI has also reduced the threshold for foreign exchange derivative transactions that can be undertaken without establishing an underlying exposure from $100 million to $5 million. This requires market participants to provide evidence of the exposure for a larger share of transactions.

The RBI has introduced additional documentation requirements to prevent the same underlying exposure from being hedged multiple times. The measure addresses the use of currency derivatives to manage foreign exchange risk.

In addition, the RBI has introduced a 20 per cent foreign exchange risk reserve requirement for specified import-related current account derivative transactions exceeding $2 million. Separately, the RBI has raised the daily cash reserve balance requirement from 90 per cent to 99 per cent of the prescribed cash reserve ratio requirement. The combined impact of these liquidity measures has been estimated at 0.40-0.60 per cent of banks’ net demand and time liabilities.

The fifth measure is a special dollar window for public sector oil marketing companies (OMCs). It allows these companies to meet their dollar requirements through a separate arrangement rather than relying entirely on the regular foreign exchange market.

Factors Driving Pressure On Rupee

India imports crude oil and other commodities which are often paid for in dollars. If the demand for dollars increases in comparison to its supply, the rupee may depreciate further. An increase in crude oil prices can also lead to an increase in India’s import bill and foreign currency needs.

Another determinant of the exchange rate is foreign investment flows. If foreign investors withdraw their money from Indian markets, the conversion of rupees into dollars could increase the demand for dollars.