RBI has taken two decisions to manage the continuously weakening Indian rupee against the dollar and to control the fluctuations in the money market. RBI has launched a ‘Special Dollar Window’ to meet the daily dollar requirements of state-owned oil companies. Apart from this, Reserve Bank of India has also tightened the rules related to Forex derivatives trading. Market experts believe that these decisions will provide some immediate relief to the rupee, but it will be difficult to completely reverse the long trend of decline. Rupee has fallen 7% so far in 2026 On Friday, October 9, the rupee had closed at 96.73 against the dollar, which is very close to its all-time-low of 96.96 recorded in May. The rupee has fallen by more than 7% so far in the calendar year 2026 and by about 3.5% in the current financial year (FY27). There is continuous pressure on the rupee due to high crude oil prices, strong dollar and sluggish foreign investment. RBI wants to stop the rupee from going above 97. RBI wants to stop the rupee from going above the 97-per-dollar level. If the rupee crosses this level, then panic buying of dollars and speculative short positions by companies may increase rapidly. In view of this, whenever the rupee crosses 96.80, dollars are being sold through public sector banks. Oil window will reduce the pressure of spot market. The share of crude oil in India’s total imports is about 25%. Now the daily dollar requirements of oil companies will be met directly from the foreign exchange reserves of RBI through a ‘special window’. This will reduce the pressure of direct demand for dollars in the spot forex market. The treasury head of a private bank said that the oil window will reduce demand in the spot market. At the same time, banning derivatives with no underlying exposure will curb speculative trading. However, India’s balance of payments remains weak, the dollar is strong and global bond yields are high. In such a situation, pressure on the rupee may remain for some time i.e. in the medium term. Dilip Parmar, research analyst at HDFC Securities, said these decisions will curb volatility and provide a shock to speculators. However, banks can pass on their additional hedging costs to customers. 4 major changes in the rules of Forex derivatives RBI has made 4 major changes on October 10 to stop speculation and discipline the market… Foreign exchange reserves reduced by $ 31.3 billion in 2 weeks. The fall in the rupee has come at a time when India’s forex reserves are continuously decreasing. Reserves fell by $18.34 billion to $757.46 billion in the week ended September 25. It further declined by $12.95 billion to $734.61 billion in the week ending October 2. Forex reserves have declined by a total of $31.3 billion in two weeks. This is down about $51.1 billion from the record all-time high ($785.7 billion) set in the first week of September. In the monetary policy press conference on October 7, RBI Governor Sanjay Malhotra had said that the rupee could be ‘undervalued’ on the basis of Real Effective Exchange Rate (REER). However, the Reserve Bank will ensure that the currency remains stable. RBI will sell government bonds worth ₹ 25,000 crore. To reduce excess cash (liquidity) from the market, RBI has taken two big decisions… RBI will sell government bonds worth ₹ 25,000 crore through Open Market Operation (OMO) on October 13, due to which the cash from the market will go to the bank. This move may see an increase of 4 to 5 basis points (0.04%-0.05%) in bond yields. At the same time, from October 16, banks will be required to maintain at least 99% of their total cash reserve ratio i.e. CRR daily, which was earlier only 90%. Although there has been no change in the main CRR rate, now banks will have to keep more cash separate with them every day. What is OMO cell, CRR and REER? 1. Open Market Operation (OMO) Sale: A way to handle inflation and rupee. When too much cash starts circulating in the market, RBI pulls that extra money from the banks by selling government bonds. Impact on the common man: Less cash in the market curbs inflation and helps in preventing sudden major falls or fluctuations in the Indian Rupee against foreign currencies. 2. Cash Reserve Ratio (CRR): Tightening the noose on banks’ laxity: Banks are required to keep a certain portion of their total deposits with the RBI in the form of cash. Under the new rule (99% daily maintenance, which was earlier only 90%), now banks will have to fulfill this quota every day. Impact on the common man: Banks will have to manage their daily liquidity (cash amount) very carefully. With this, banks will lose the freedom to use cash as per their wish on a daily basis or take big risks. 3. Real Effective Exchange Rate (REER): A meter to measure the real strength of the rupee. This is an index or scale that shows how strong or weak the Indian rupee actually is compared to the currencies of the major trading partner countries of the world (like dollar, euro, yuan). Impact on the common man: This shows the health of the country’s import-export. If the rupee strengthens in terms of REER, then importing goods from abroad becomes cheaper and selling goods outside the country becomes expensive.
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RBI’s plan to stop the fall of rupee: Special dollar window opened for government oil companies, rules for forex derivative trading tightened
