Mumbai: The rupee is set to open sharply stronger on Monday after the Reserve Bank of India (RBI) moved over the weekend to curb speculative bets and divert dollar demand from the spot market, but market experts say the relief is likely to be short-lived.
From 12 October, the RBI will supply dollars directly to three state-run oil marketing companies and has tightened rules on currency derivatives. That may drive the rupee 1% higher on Monday, according to Emkay Global Financial Services. The RBI will meet the entire daily dollar requirement of Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp. through a special window, supplying dollars via designated banks and taking the companies’ purchases out of the spot market.
The rupee closed at 96.73 per dollar on Friday, near its record low of 96.96 in May. It has depreciated nearly 8% so far this calendar year and 11% in FY26, according to Bloomberg data.
While the RBI's measures could support the rupee in the near term, market participants said they are unlikely to reverse its longer-term depreciation trend, with high crude oil prices, capital outflows and adverse balance of payments dynamics continuing to weigh on the currency.
In a separate circular, the RBI announced four additional measures to curb speculative activity in the foreign exchange market. These include barring the rebooking of cancelled rupee-linked foreign exchange derivative contracts, lowering the threshold for derivative transactions without an underlying exposure to $5 million from $100 million, and requiring clients to submit an undertaking confirming that the same underlying exposure has not been hedged through another authorized dealer.