Mumbai: In a major relief to the domestic currency market, the Indian Rupee registered its most significant single-day gain in six months on Monday. Driven by crucial weekend policy interventions by the Reserve Bank of India (RBI), the rupee surged by 96 paise, closing at 95.75 against the US dollar. During the day’s trading session, the currency briefly saw gains exceeding one rupee.
This sharp recovery comes after the rupee had been under severe pressure, having weakened by over 7% since the beginning of 2026 due to soaring crude oil prices, a stronger dollar, and continuous capital outflows by foreign portfolio investors. The currency’s impressive bounce back is its largest jump since April 2, 2026, when it rallied by 166 paise against the dollar. On the previous trading day, Friday, the rupee had closed at 96.71 against the greenback.
The dramatic rebound is largely attributed to a series of strategic measures announced by the RBI on Saturday aimed at arresting the rupee’s steep depreciation. Market experts had been anticipating the central bank’s intervention following its recent policy meet.
A key measure implemented by the RBI includes the opening of a special dollar window specifically designed to meet the daily foreign exchange requirements of state-run oil marketing companies (OMCs). This move directs OMCs like Indian Oil Corporation, Hindustan Petroleum, and Bharat Petroleum to route their dollar demands through designated banks rather than the regular spot market. Experts suggest this will significantly reduce the immediate dollar demand in the open market, easing the downward pressure on the rupee.
Furthermore, the central bank took strict actions to curb speculative trading against the rupee. The limit for certain foreign exchange derivative transactions without an underlying exposure was drastically slashed from $100 million down to $5 million. The RBI also mandated a 20% cash reserve requirement on select foreign exchange contracts.
While these interventions have successfully provided immediate support to the domestic currency, experts note that they primarily alter how dollars are purchased and make forward hedging more expensive, without necessarily reducing the real underlying demand for dollars stemming from trade and oil imports.
Meanwhile, recent RBI data released on Friday showed that India’s foreign exchange reserves declined by $12.952 billion to stand at $734.606 billion for the week ending October 2.