The Indian rupee recorded its strongest single-day gain in six months after the Reserve Bank of India introduced measures to curb dollar demand and support the currency.
The Indian rupee strengthened by around 1% against the US dollar on October 12, 2026, after the Reserve Bank of India (RBI) introduced measures to reduce pressure on the currency. The rupee rose to 95.77 per dollar from Friday’s close of 96.73, marking its strongest single-day gain since April, Reuters reported.
The rally followed a series of measures announced by the RBI over the weekend to address two major sources of pressure on the rupee: dollar purchases by oil companies in the spot market and demand from businesses seeking to hedge against further currency depreciation.
Under the new arrangement, oil marketing companies can purchase dollars through a special window provided by the central bank, redirecting their requirements away from the regular spot market. The change is expected to shift approximately $10 billion to $12 billion in monthly dollar demand away from that market, based on oil import data.
The RBI has also tightened rules governing certain foreign-exchange derivatives. These measures include restrictions on rebooking cancelled rupee-linked derivative contracts, a lower threshold for specified transactions without underlying exposure, and a requirement for banks to maintain a 20% cash deposit against certain foreign-exchange contracts. The changes are intended to discourage speculative activity and may increase the cost of some currency hedges.
The rupee had come close to its record low of 96.96 per dollar in the previous week, amid elevated crude oil prices and sustained foreign capital outflows. Higher oil import costs increase India’s demand for dollars, while overseas investors withdrawing funds can add further pressure on the domestic currency.
The RBI’s measures have provided immediate support, but analysts caution that the currency’s recovery may not last without an improvement in underlying economic conditions. The measures redirect or raise the cost of some dollar purchases rather than eliminate the demand created by oil imports and other external payments.
The new rules could also affect the foreign-exchange hedging market. Higher costs for certain transactions may reduce importers’ demand for forward dollars, while additional costs for banks and tighter market liquidity could influence pricing in the opposite direction. Exporters’ hedging activity is not directly affected by the measures.
The rupee’s future direction will depend on crude oil prices, foreign investment flows and the strength of the US dollar. Although the RBI’s intervention has eased immediate pressure, persistent capital outflows and India’s import bill remain key risks for the currency.
