Rupee Near Record Low: The RBI's Package of Steps to Support the Currency
On October 10, 2026, the Reserve Bank of India (RBI) announced a fresh set of steps to support the rupee. The rupee had closed at 96.73 per US dollar on October 9, very close to its all-time low of 96.96, reached in May 2026.
The rupee had lost more than 7% of its value in 2026. The main pressures were rising oil prices (which raise India's import bill) and high global bond yields (which pull foreign money out of India).
Step 1, a dollar window: the RBI will supply dollars directly to three state-run oil companies (IOC, BPCL and HPCL) from October 12, so their large daily dollar buying moves out of the market.
Step 2, tighter derivative rules: banks must keep a 20% Foreign Exchange Risk Reserve with the RBI on large rupee derivative contracts used to buy foreign currency; rebooking of forex derivatives is barred; and the limit for positions in exchange-traded rupee currency derivatives is cut from USD 100 million to USD 5 million.
These steps came on top of earlier action: the RBI had already been selling dollars, and on October 7, 2026 it raised the repo rate by 25 basis points to 5.50%.
Exchange Rate Management in India: RBI's Managed Float
India's exchange rate is the price of the rupee in other currencies, for example how many rupees one US dollar costs. India follows a managed float: the market mostly sets the rate through the demand for and supply of dollars, but the RBI steps in when the rupee moves too sharply. The RBI says it does not target any particular level. Its aim is to stop disorderly swings.
The October 10 package uses almost every tool in this toolkit at once: dollar sales (now directly to oil firms), an earlier rate hike, and tighter derivative rules. This shows the RBI is trying to calm the market without fixing any exchange rate.
Balance of Payments (BoP)
The Balance of Payments is a record of all money flowing between India and the rest of the world over a period. It has two main parts. The current account records trade in goods and services, income and transfers (like money sent home by Indians abroad). The capital account (financial account) records investment and loans, such as foreign investors buying Indian shares.
The rupee's fall in 2026 comes from both sides of the BoP: costlier oil is pushing up dollar outflows on the current account, and high global yields are weakening capital inflows. The RBI's steps try to manage this dollar demand, but lasting relief depends on oil prices and capital flows.
- Rupee close on October 9, 2026: 96.73 per USD; all-time low 96.96 (May 2026)
- Rupee fall in 2026: more than 7%
- Dollar window for IOC, BPCL, HPCL: effective October 12, 2026, until further notice
- Foreign Exchange Risk Reserve: 20% of notional on INR forex derivatives above USD 2 million used to buy foreign currency for current account deals
- Exchange-traded rupee currency derivatives position limit: cut from USD 100 million to USD 5 million
- Rebooking of forex derivatives: barred
- Repo rate: raised by 25 bps to 5.50% on October 7, 2026 (SDF 5.25%, MSF and Bank Rate 5.75%)
- Forex reserves: about USD 734.61 billion (week ended October 2, 2026)