RBI
RBI Cracks Down on Forex Derivatives, Opens Dollar Window for OMCs
12 October 2026 · www.ndtvprofit.com
The RBI has introduced foreign exchange curbs effective from October 10 to ease pressure on the rupee, including a 20% Foreign Exchange Risk Reserve on certain derivative contracts and a ban on rebooking cancelled INR-linked forex derivatives. It also opened a special window to sell dollars to three public sector oil marketing companies to meet their entire daily dollar requirements.
Points to Remember
- RBI barred authorised dealers from allowing users to rebook any cancelled rupee-linked foreign exchange derivative contract, whether deliverable or non-deliverable.
- The threshold for derivative transactions without underlying exposure was reduced to $5 million from $100 million.
- A Foreign Exchange Risk Reserve (FERR) of 20% of the rupee value is required on eligible derivative contracts exceeding $2 million, specifically for specified hedges against current account exposures involving foreign currency purchases.
- A special window was opened for Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation to meet their entire daily dollar requirements via designated banks.
- The rupee appreciated nearly 94 paise to 95.81 against the US dollar after closing at 96.73 on Friday.
Why it matters
These new rules tighten forex derivative trading and introduce a reserve requirement that could affect how banks handle customer derivative contracts. The special dollar window for oil companies may also influence forex market liquidity, so be prepared for customer queries on forex hedging and derivatives.
Back to Daily Updates