After weeks of bad news, the rupee finally had a good morning. On Monday, October 12, it opened 98 paise stronger at about 95.75 against the US dollar, up from Friday’s close of 96.73, according to Kotak Neo. That is a jump of about 1% in one go, which is big for a currency.
The reason: new rules from the Reserve Bank of India that make it harder and more expensive to bet against the rupee.
What did the RBI change?
In simple terms, the RBI is going after the extra demand for dollars that was pushing the rupee down. The key changes:
- Smaller limit for “unhedged” deals. Companies could earlier do forex derivative deals of up to $100 million without showing a real business need. That limit has been cut to just $5 million.
- A new 20% reserve. The RBI has introduced a 20% Foreign Exchange Risk Reserve on such deals, which makes them costlier.
- No re-booking of cancelled contracts. Banks can no longer let customers re-book rupee derivative contracts they have cancelled, though contracts can still be rolled over when they mature.
- Direct dollars for oil companies. A special window lets IOCL, HPCL and BPCL buy dollars directly from the RBI, so their large oil import bills don’t hit the open market.
Bankers estimate these changes could raise hedging costs by 0.8 to 1.5 percentage points.
Why the rupee was falling
Two things have been hurting the rupee. First, high and volatile oil prices, because India imports most of its oil and pays in dollars. Second, foreign investors have been selling Indian shares heavily, more than ₹44,000 crore in October alone by some estimates, and taking their money out in dollars.
On top of that, Indian companies rushed to lock in dollars for the future. Their forward dollar purchases hit a record $77 billion in September, up 80% from a year earlier, according to investingLive. That buying rush is exactly what the RBI is now trying to slow down.
Will the gains last?
Many analysts are cautious. Rules like these have helped the rupee before, but usually only for a while. For a lasting recovery, foreign investors need to stop selling and oil prices need to calm down. Any fresh jump in crude prices could undo Monday’s gains quickly.
What it means for you
Studying or travelling abroad? A stronger rupee makes fees and trips a little cheaper. If you need dollars soon, it may make sense to buy some now rather than wait.
Buying imported gadgets or fuel? A stronger rupee helps, but only if it holds for weeks, not days.
Getting money from abroad? Family members sending money home will get slightly fewer rupees per dollar than last week.
The RBI has also raised the repo rate to 5.50% this month to fight inflation. Markets bounced back strongly on Friday too: read why the Sensex jumped 879 points.
Questions to think about
- Can rules on their own keep the rupee steady, or do bigger changes need to happen?
- What would bring foreign investors back to Indian markets?
- How does a weaker or stronger rupee affect your own budget?
Sources: Kotak Neo, The Hans India, investingLive and PTI reports, as of October 12, 2026. Currency rates change through the day. This is not investment advice.
