Rupee Gains Around 1% as RBI Tightens Forex Rules

The rupee jumped about 1% on Monday, trading near 95.78 per US dollar, after the RBI introduced new rules to curb speculative forex trading. It opened at 95.76 and later touched 95.5850, the strongest level in weeks. The RBI’s package tightened rules on re‑booking cancelled FX derivative contracts, lowered the exposure threshold, tightened documentation and created a Foreign Exchange Risk Reserve. It also opened a special window for oil‑marketing companies’ dollar needs and raised the daily cash reserve ratio to soak up excess liquidity. Dilip Parmar of HDFC Securities said the measures made the rupee the strongest among Asian peers. A pullback in crude oil prices, helped by expectations of better supply, added to the rally, while weaker domestic equities and foreign fund outflows kept the gain limited. The Indian rupee’s steepest single‑day rise in over six months was 95 paise, according to Indian Express. Forex reserves fell by $12.95 billion to $734.60 billion in the week to Oct 2, despite more than $143 billion inflows under the FCNR scheme. The BSE Sensex slipped 0.76% to 71,924.68 and the NSE Nifty fell 0.70% to 22,363.35.

Context

The RBI’s tighter forex rules aim to reduce sudden dollar‑buying spikes that can weaken the rupee, a common challenge for emerging‑market currencies.