The Indian rupee reached 94.80 per U.S. dollar in early Monday trading, Press Trust of India reported, amid new central bank measures governing oil marketers’ dollar purchases and rupee-linked derivatives. The agency said the currency opened at 94.90 before touching 94.80 in interbank trading.
Reuters later quoted the rupee at 94.8225 per dollar, up 0.1% from Friday’s close in its report. Reuters reported a 2% rise last week, the currency’s biggest one-week increase in almost four years.
The Reserve Bank of India (RBI) announced a dollar window Oct. 10 for Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited. Under the arrangement, the RBI sells dollars through designated banks to meet the companies’ entire daily dollar requirements. The window began operating Oct. 12 and remains in place until further notice.
Traders told Reuters that dollar sales by foreign banks and a decline in oil prices supported the rupee. At the time of Reuters’ update, Brent crude was down nearly 2% at $107.70 a barrel, while the dollar index was little changed near 101.8.
The RBI also tightened rules for specified rupee-linked foreign-exchange derivatives. Authorized dealers must refuse to rebook contracts canceled after the directions were issued, although rollover at maturity remains permitted. The RBI lowered from $100 million to $5 million the limit for certain positions taken without establishing an underlying exposure. For qualifying current-account hedges above $2 million in which users buy foreign currency against rupees, dealers must hold cash equal to 20% of the rupee-equivalent notional value. The RBI said the changes were intended to improve risk controls and keep trading orderly.
An RBI publication describes a comparable 2013 window that supplied dollars to public-sector oil marketers, temporarily reducing their demand in the wider foreign-exchange market.
Separately, the RBI said it decided to hold a seven-day variable-rate repo auction after reviewing current liquidity and how near-term conditions were developing. The auction received ₹150,735 crore in bids and allotted ₹100,014 crore at a weighted average rate of 5.52%. The banking-system liquidity operation is scheduled to reverse Oct. 26.
