RBI Measures Fuel Rupee Rally Amid Rising Hedging Costs

India's rupee set for a strong start as RBI curbs dollar demand, but rising hedging costs pose challenges.

October 12, 2026 One Min Read

POLICY WIRE — New Delhi, India — The Indian rupee is expected to open with gains on Monday following the Reserve Bank of India’s intensified efforts to manage dollar demand. Traders anticipate a rise of about 1% to a range of 95.60-95.90 against the US dollar, after closing at 96.73 on Friday.

The central bank’s actions include direct dollar allocations to state-owned oil companies and measures to limit speculative currency trades, which are seen as short-term supports for the rupee. However, experts warn that high oil prices continue to strain the currency, with crude cost pressures remaining a key vulnerability.

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On Wednesday, after the RBI’s policy meeting, forward premiums for the dollar-rupee pair surged to their highest level in six months. This reflects growing expectations of further foreign exchange swaps from the central bank, as traders brace for more liquidity management moves. Despite these developments, the rupee remains under pressure from energy-related import costs and global geopolitical risks.

Reporting by Policy-Wire (PW)

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