RBI measures, intervention spark rupee's sharpest rally in six months
Benchmarks Nifty22,622.70-99.25FEATURED FUNDS★★★★★UTI Aggressive Hybrid Fund Regular Plan-Growth5Y Return8.71 % Invest NowFEATURED FUNDS★★★★★Motilal Oswal Midcap Fund Direct-Growth5Y Return19.29 % Invest NowEnter search…
On Monday, the Indian rupee gained about 1% after the Reserve Bank of India announced measures to curb dollar demand. Oil companies' dollar purchases will now be directed away from the spot market, easing pressure on the rupee. This intervention aims to address the mounting balance of payments challenges due to high oil prices. However, analysts remain cautious about the sustainability of the rupee's recovery moving forward.
Listen to this article in summarized format
Loading...×The Indian rupee rose about 1% on Monday after the central bank took steps to temper dollar demand in spot and derivatives markets, with likely intervention through dollar sales adding to the gains.The rupee rose 1% to 95.77 per dollar from 96.73 on Friday, outperforming mostly rangebound Asian peers and posting its best single day gain since April, which had also been sparked a set of measures to shore up the unit.
India announced new steps on Saturday after the rupee neared its record low of 96.96 per dollar last week.
The changes involve redirecting oil companies' dollar purchases away from the spot market and tightening hedging rules as the currency hovers near record lows.
The oil window is expected to take out about $10-12 billion of monthly dollar demand from the spot market, per government data on oil imports.
Live Events
The recent moves follow a series of other measures taken to shield the currency and bolster the country's balance of payments strained by a heavy import bill due to high oil prices and persistent capital outflows.
Banks turned cautious about offering forward dollar hedges to importers on Monday after the Reserve Bank of India's latest forex measures sharply raised costs and are expected to slow a hedging surge that had dragged the currency, bankers said.
Expectations of longer-term weakness pushed importers to step up purchases of forward dollars to record levels last month. That hedging demand, in turn, added strain on the currency, creating a cycle of depreciation expectations, increased hedging and further weakness in the rupee.
The RBI also likely intervened in the FX market on Monday to bolster the rupee's gains through dollar sales by state-run banks, traders said.
RALLY FACES A TEST
While the rupee has rallied sharply in the aftermath of the RBI's measures, the sustainability of the recovery will depend on whether underlying pressures subside, analysts say.
On Monday, the rally encountered one of its first hurdles when sharp rupee gains drew hedging-related flows into the non-deliverable forward market, a senior trader at a foreign bank said.
The flows were likely linked to hedging of foreign portfolio investments in India, the banker said. Persistent capital outflows - to the tune of over $30 billion from local stocks over 2026 so far - have been a persistent pain point for the rupee.
"Unless BoP pressures ease more broadly, gradual INR depreciation is likely to resume once their initial impact fades," analysts at ANZ said.
The firm has retained its medium-term INR depreciation view and said it will reassess levels after reviewing hedging and FX reserve data in the coming weeks.
India's FX reserves declined to $734 billion as of October 2 after hitting a record high of $785 billion in September.
Add as a Reliable and Trusted News Source Add Now!
(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onRBI measuresIndian rupee rallydollar demand interventionforex marketINR depreciationcapital outflowsforeign portfolio investmentsfx reserves India
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...moreless(You can now subscribe to our ETMarkets WhatsApp channel)
Read More News onRBI measuresIndian rupee rallydollar demand interventionforex marketINR depreciationcapital outflowsforeign portfolio investmentsfx reserves India
(What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)
Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price
...morelessPrime ExclusivesInvestment IdeasStock Report PlusePaperWealth EditionOnion inflation at 108%? Yes, but not really. What is different this time?
Curbing rupee bets: What the RBI’s new rules mean for the hedge-now-or-wait question
Brinjal, buffalo, bacteria: Inside India’s pay-for-nature system
Homebuyers wait as NCLT panel picks holes in unfinished Jaypee projects
The NBFC saga - Part 3: How one default in 2018 changed the way RBI reads risk
Four rules made HDFC Bank a compounder. All four have stopped. Can the new CEO rewrite them?
- 1
- 2
- 3
& personalised newslettersLogin NowUnlimited AccessStarting @ Rs120/monthGet access to exclusive stories, expert opinions &
in-depth stock reportsSubscribe NowET
Unlock Access to All Exclusives with ETPrime FREE TRIAL
15 Days Free: Unlock All ETPrime Exclusives, Market Tools & ePapers
Trial offer expiring in00 : 05 : 00
I'd rather pay ₹2599 nowUh-oh! This is an exclusive story available for selected readers only.
Worry not. You’re just a step away.
Prime Account Detected!
It seems like you're already an ETPrime member with
Login using your ET Prime credentials to enjoy all member benefits
Log out of your current logged-in account and log in again using your ET Prime credentials to enjoy all member benefits.
Unlock ETPrime's Exclusive Stories Today!
Big Price Drop! Flat 40% Off
Student Only OfferAlready a Member? Sign In nowAlready a Member? Sign In nowAlready a Member? Sign In nowOffer Exclusively For You
Save up to Rs. 700/-
ON ET PRIME MEMBERSHIP
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get 1 Year Free
With 1 and 2-Year ET prime membership
Avail OfferOffer Exclusively For You
Get Flat 40% Off
Then ₹ 1749 for 1 year
Avail OfferOffer Exclusively For You
ET Prime at ₹ 49 for 1 month
Then ₹ 1749 for 1 year
Avail OfferSpecial Offer
Get flat 40% off on ETPrime
Avail OfferAvail OfferClaim NowAlready a Member? Sign In nowNeed Assistance?
Connect with an ETPrime expert for personalized support and guidance
+91 9484700004'; }); } if(listing) { var h3 = "You tried reading " + listArr.length + " locked stories in the past " + threshold + " days.", h4 = "Become an ET Prime member and don't miss out on these exclusive stories."; var html = '' + h3 + '
' + h4 + '
- ' + listing + '
What’s Included with
ETPrime Membership
1Exclusive Insights That Matter
Uncover the truth with our investigative stories
Make strategic moves using the real-world case studies
Read industry-specific stories to identify emerging trends
Spot opportunities with in-depth insights that matter
Trump temper on H-1B visas is forcing Indians to do these things to stay put in US
What Adani’s US indictment means for India Inc’s overseas fundraising
Why veterans like Reliance, L&T are on acquisition spree? Aswath Damodaran has an answer.
Will China’s dollar bond sale in Saudi Arabia trump the US in financial world?
Huawei launches its own OS to compete with Google and Apple. But can it win beyond China?
The problem with lab grown diamonds
Why a falling rupee is a better option for the economy
A list of top 20 momentum stocks that have delivered massive returns in one year
2Invest Wisely With Smart Market Tools & Investment Ideas
Alpha Trade
Get daily trade ideas from SEBI-registered research analysts.
Investment Ideas
Grow your wealth with stock ideas & sectoral trends.
Stock Reports Plus
All-in-one stock research with Stock Score, peer comparison & key signals.
BigBull Portfolio
Get to know where the market bulls are investing to identify the right stocks.
Stock Analyzer
Check the score based on the company's fundamentals, solvency, growth, risk & ownership to decide the right stocks.
Market Mood
Analyze the market sentiments & identify the trend reversal for strategic decisions.
Stock Talk Live at 9 AM Daily
Ask your stock queries & get assured replies by ET appointed, SEBI registered experts.
3Stay informed anytime, anywhere with ET ePaper
ePaper - Print View
Read the PDF version of ET newspaper. Download & access it offline anytime.
ePaper - Digital View
Read your daily newspaper in Digital View & get it delivered to your inbox everyday.
Wealth Edition
Manage your money efficiently with this weekly money management guide.
TOI ePaper
Read the PDF version of TOI newspaper. Download & access it offline anytime.
Deep Explainers
Explore the In-depth explanation of complex topics for everyday life decisions.
Health+ Stories
Get fitter with daily health insights committed to your well-being.
Personal Finance+ Stories
Manage your wealth better with in-depth insights & updates on finance.
5Enjoy Complimentary Subscriptions From Top Brands
Stream new documentaries from all across the world every day.
Stories you might be interested in
Figures reflect the source report and its stated period. This article is for information and is not investment advice.
