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RBI Opens Dollar Window, Cuts FX Derivatives Exposure Limits

By Drooid · Oct 10, 2026, 4:03 PM UTC · How we work

Summary

RBI Tightens FX Rules

RBI opened a dollar window for Indian Oil, Hindustan Petroleum and Bharat Petroleum to meet dollar needs from Oct 12.
RBI cut the no-underlying-exposure limit for FX derivatives from $100 million to $5 million on Oct 10.
RBI barred rebooking of cancelled rupee-linked foreign-exchange contracts for all authorised dealers.
RBI raised its policy repo rate by 25 basis points to 5.5% on Oct 7.

Summary

RBI Reserves Plunge

The Reserve Bank of India (RBI) foreign exchange reserves fell $12.95 billion to $734.61 billion in the week ended 2 Oct 2026.
The RBI recorded its largest weekly reserve decline of $18 billion in the week ended 25 Sep 2026.
The one-year dollar/rupee forward premium rose to 3.66 %, the highest in six months.
Net foreign direct investment reached $13.8 billion in the first four months, up from $9.6 billion a year earlier.

History

Historical Context

In the 1998 Asian financial crisis, the Reserve Bank of India raised its repo rate to 7% and freed $10 billion of reserves as the rupee slipped 12% versus the dollar. China kept the yuan pegged and pledged $4 billion to regional bailouts, prompting Asian states to build large foreign-exchange buffers—a precedent reflected in today’s RBI dollar window and its $5 million FX-derivative cap.

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RBI Tightens FX Rules

RBI opened a dollar window for Indian Oil, Hindustan Petroleum and Bharat Petroleum to meet dollar needs from Oct 12.
RBI cut the no-underlying-exposure limit for FX derivatives from $100 million to $5 million on Oct 10.
RBI barred rebooking of cancelled rupee-linked foreign-exchange contracts for all authorised dealers.
RBI raised its policy repo rate by 25 basis points to 5.5% on Oct 7.

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