Rupee Rebounds 91 Paise To 95.80, RBI Forex Measures Fuel Recovery

Mumbai: The rupee gained 91 paise to 95.80 against the US dollar in early trading on October 12 after the Reserve Bank of India announced measures to curb currency volatility and speculative positions.

The currency opened at 95.61 before surrendering gains. It had closed Friday at 96.71, recovering from Thursday’s record closing low of 96.88.

RBI Opens Dollar Window For Oil Companies

The central bank announced a dollar window for oil marketing companies through designated banks, alongside tighter foreign exchange derivative rules.

The steps aim to reduce dollar demand in the spot market and strengthen risk management. Forex analysts said they could help the rupee withstand pressure from expensive crude oil and dollar strength.

Tighter Rules For Currency Derivatives

Under its October 10 circulars, RBI prohibited authorised dealers from permitting the rebooking of cancelled rupee-linked foreign exchange derivative contracts. Rollovers at maturity remain permitted under regulations.

It also lowered the limit for derivative transactions without an established underlying exposure to $5 million from $100 million across authorised dealers and recognised stock exchanges.

A Foreign Exchange Risk Reserve requires dealers to place cash with RBI equal to 20 per cent of the rupee equivalent of qualifying contracts’ notional value.

The requirement covers contracts exceeding $2 million used to hedge current-account exposures involving foreign currency purchases against the rupee.

Dollar And Oil Prices Ease

The dollar index slipped 0.08 per cent to 101.94. Brent crude futures declined 1.54 per cent to $103.11 a barrel, although prices remained elevated.

Domestic equities were mixed. The Sensex fell 20 points to 72,452.33, while the Nifty edged higher by 7.95 points to 22,529.85.

Foreign Selling And Reserves In Focus

Foreign institutional investors sold equities worth ₹3,568.90 crore on Friday, according to exchange data.

India’s foreign exchange reserves declined $12.952 billion to $734.606 billion in the week ended October 2. This followed an $18.343 billion fall to $747.557 billion during the previous reporting week, RBI data showed.