RBI rupee measures triggered a sharp recovery in the Indian currency on Monday, with the rupee gaining about 1% against the US dollar after the central bank moved to reduce pressure from oil companies and corporate demand for forward dollars.
The rupee opened at 95.76 to the dollar, compared with Friday’s close of 96.73, making it one of Asia’s strongest-performing currencies during the session. The move followed a set of measures announced by the Reserve Bank of India on Saturday to address sustained dollar demand and expectations of further currency depreciation.
One of the main pressures identified in the report was dollar buying by oil marketing companies amid elevated crude oil prices. Oil companies typically need dollars to pay for imports, and sustained purchases in the spot market can increase demand for the US currency. The RBI’s measures shift such purchases away from the spot market, easing immediate pressure on the rupee.
The central bank also acted against corporate demand for forward dollars. Importers had increased their purchases of forward contracts to protect themselves from potentially higher costs if the rupee weakened further. However, the report said this hedging demand added to pressure on the currency, creating a cycle in which expectations of depreciation encouraged more dollar purchases and reinforced concerns about further weakness.
The measures include a ban on companies rebooking cancelled rupee-linked derivatives, a lower threshold for transactions without an underlying exposure and a requirement for banks to maintain a 20% cash reserve against certain foreign-exchange contracts. These changes could make some forms of hedging against a weaker rupee more expensive.
Citi said in a note that the package raises the immediate cost of trades designed to benefit from rupee depreciation. Bankers, however, clarified that the restrictions do not apply to every foreign-exchange transaction and cover only current account transactions. The 20% cash requirement does not apply to companies hedging external commercial borrowings or to foreign portfolio investors hedging their investments in India.
The rupee’s Monday recovery came despite a broader deterioration in its performance this year. According to a Reuters report cited by the Times of India, the currency had still declined 6.6% against the dollar so far in 2026. The immediate market reaction therefore reflects the effect of the RBI’s measures on dollar demand rather than a confirmed reversal of the factors weighing on the rupee.
The durability of the gains will depend on whether those underlying pressures begin to ease. Societe Generale said in a note that the rupee’s trajectory would continue to be shaped by crude oil prices, foreign portfolio flows and the broader direction of the US dollar. The RBI’s measures have changed the cost and timing of some foreign-exchange transactions, while the next phase for the currency will depend on how these wider market forces develop.
