The Reserve Bank of India will open a special dollar window for Indian Oil Corporation (IOCL), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) from October 12 to help the three state-owned oil companies meet their daily foreign-currency requirements, as the rupee remains close to its record low against the US dollar.
According to the RBI statement cited by Aaj Tak Business, the facility will operate through designated banks and remain available until further notice. The central bank has not disclosed the total amount of foreign currency that will be supplied through the arrangement or specified limits for individual transactions.
The facility is intended to give the oil marketing companies a direct banking channel for obtaining US dollars required for their operations. The companies need dollars for crude oil imports and other overseas payments because international crude transactions are primarily conducted in the US currency.
A weaker rupee raises the cost of these payments in domestic-currency terms. The exchange rate can therefore affect the companies’ foreign-currency needs and the financial requirements associated with importing crude oil. The RBI’s move comes as the rupee remains under pressure despite the central bank’s intervention in the foreign-exchange market and increases in interest rates.
The rupee closed at Rs 96.73 per dollar on Friday, according to the report, close to its all-time low of Rs 96.96 recorded in May. The RBI has not said how long the special oil-company arrangement will remain in place beyond confirming that it will continue until further orders.
Alongside the dollar window, the central bank has reduced the limit for certain foreign-exchange derivative transactions from $100 million to $5 million. The revised threshold also applies to rupee-linked exchange-traded currency derivatives on recognised stock exchanges.
The RBI said the changes are intended to ensure that large derivative positions are linked to genuine economic requirements, such as import payments or export support, rather than being used mainly for speculative activity. The new limit is part of a broader set of measures aimed at managing demand for foreign currency and reducing market risks.
The central bank has also introduced a foreign-exchange risk reserve requirement for eligible rupee-linked foreign-exchange derivative contracts with a notional value above $2 million. Under the arrangement, registered dealers must maintain a cash reserve with the RBI equal to 20% of the rupee value of each eligible transaction. The requirement applies to contracts used to hedge current-account risks where users purchase foreign currency against the rupee.
Registered dealers must additionally obtain and retain an undertaking from users entering foreign-exchange derivative contracts. The undertaking must confirm that the same risk has not already been hedged through another dealer. This documentation requirement is intended to prevent duplicate hedging of the same exposure.
The measures may reduce speculative demand for dollars and provide short-term support to market stability, although the rupee’s movement will also depend on crude oil prices, foreign investment flows and broader global dollar conditions. India’s foreign-exchange reserves fell by $12.95 billion to $734.60 billion in the week ended October 2, marking a fourth consecutive weekly decline, according to the report.
