RBI opens a dollar window for state oil marketers and tightens FX hedge rules

India's central bank said Saturday it will sell dollars directly to three state-owned oil marketing companies for their daily needs starting Monday, and it issued matching circulars that ban rebooking cancelled rupee foreign-exchange hedges, cut the threshold for no-underlying derivative positions to $5 million from $100 million, and require dealers to post a 20% cash Foreign Exchange Risk Reserve on larger hedges.

Press Release 2026-2027/1306, dated Oct. 10, 2026, says the Reserve Bank of India will open a special window to meet the entire daily dollar requirements of Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited. Under the facility, the Reserve Bank will sell U.S. dollars to those companies through designated banks. The window takes effect Oct. 12, 2026, and stays in place until further notice. Chief General Manager Brij Raj signed the release.

Derivative curbs land the same day

A companion release, Press Release 2026-2027/1305, says the bank issued A.P. (DIR Series) Circular No. 25 and Circular No. 26 the same day. Circular 25 tells authorised dealers not to let users rebook any cancelled foreign-exchange derivative contract that involves the rupee, whether deliverable or non-deliverable. Rollovers at maturity remain allowed under existing rules. The circular also cuts the threshold for taking positions without proving an underlying exposure from $100 million equivalent to $5 million equivalent across all authorised dealers, and makes the same cut for exchange-traded currency derivatives that involve the rupee across all recognised stock exchanges. Dealers must obtain and keep an undertaking that the same underlying has not been hedged with another dealer. Those directions take effect immediately.

Twenty percent cash reserve on larger hedges

Circular 26 creates a Foreign Exchange Risk Reserve. For rupee foreign-exchange derivative contracts with notional value above $2 million equivalent that hedge current-account exposures where the user buys foreign currency against the rupee, authorised dealers must keep cash with the Reserve Bank equal to 20% of the rupee equivalent of each contract's notional amount, reported daily through the bank's Centralised Information Management System. The reserve applies to contracts entered after the circular. Attempts to split trades to dodge the threshold count as a violation. Chief General Manager Dimple Bhandia signed both circulars.

Why the package matters into bank week

Together the window and the circulars pull a large, recurring source of dollar demand out of the open market and tighten the rules for speculative or lightly documented rupee derivative books. That is a market-structure move, not a change in the policy repo rate. It sits beside the bank's Oct. 7 repo hike rather than replacing it. Readers tracking the rupee into U.S. bank earnings starting Tuesday and U.S. CPI on Wednesday now have a primary-sourced weekend package: direct dollar supply for the three oil marketers from Monday, plus harder documentation, lower no-underlying limits, and a cash reserve that raises the cost of larger hedges.

What this does not settle

The releases do not say how many dollars will move through the window, how long "until further notice" will last, or whether the Reserve Bank will change the policy rate again before year-end. They also do not quote a Friday or Saturday rupee print; those tape levels belong to market data, not these circulars. Until the bank posts volumes, a withdrawal date, or a new monetary-policy decision, the cleanest read from Saturday's primaries is the structure itself: direct dollar sales to Indian Oil, HPCL, and BPCL from Oct. 12, a rebooking ban, a $5 million no-underlying cap, and a 20% cash reserve on qualifying hedges above $2 million.