Rupee rebounds over 1% to 95.73 per dollar after RBI forex curbs
Why in the news
On Monday, 12 October 2026, the Indian rupee opened more than 1% stronger at 95.73 per US dollar, after the Reserve Bank of India (RBI) announced a set of measures on Saturday, 10 October, to curb dollar demand.
Key facts
- Opening level: 95.73 per dollar on 12 October, against the previous close of 96.76 on Friday.
- Record low: 96.9650 per dollar; the rupee had closed just above this level on 9 October.
- 2026 performance: the rupee has weakened about 7% this year, the weakest showing in Asia.
- Oil window: a special window to meet the daily dollar needs of IOCL, BPCL and HPCL, keeping their demand out of the interbank market.
- Foreign Exchange Risk Reserve (FERR): banks must keep with the RBI 20% of the notional rupee value of import-related contracts, making hedging costlier for importers.
- Derivative limit: FX derivative deals allowed without proof of underlying exposure cut to $5 million from $100 million.
- Rebooking ban: cancelled rupee FX derivative contracts cannot be rebooked.
- Reserves used: about $51 billion spent defending the rupee over the past four weeks.
| Item | Before | After |
|---|---|---|
| Rupee per dollar | 96.76 (9 Oct close) | 95.73 (12 Oct open) |
| Derivatives without underlying exposure | $100 million | $5 million |
About the RBI response
The weekend steps are described as among the RBI’s strongest since the 2013 taper tantrum. The central bank had also raised its policy rate earlier that week and signalled readiness for more tightening. Foreign funds have withdrawn over $30 billion from Indian equities in 2026, adding pressure on the currency.
Exam angle
- Know the tools of currency defence: direct dollar sales, special windows for oil importers, and curbs on speculative derivatives.
- Remember the new term FERR and its 20% rate.
- A weaker rupee raises the import bill, especially for crude oil, and feeds inflation.