Reserve Bank of India defends rupee as currency rebounds from lows

Indian rupee: The Indian rupee functions as the official currency of India and trades actively in global foreign exchange markets. Following central bank actions in October 2026, it rebounded from levels near record lows against the US dollar. The currency continues to face pressures from external economic factors while benefiting from domestic policy support. Reserve Bank of India: The Reserve Bank of India serves as the nation's central bank, overseeing monetary policy, banking regulation, and currency management. In mid-October 2026, it implemented a series of aggressive measures including dedicated dollar supplies for state-owned oil companies and tighter rules on foreign exchange derivatives to support the currency. These steps represent its most significant intervention in the forex market in over a decade. Currency Defense: The Reserve Bank of India introduced restrictions on forex derivatives trading and a new foreign exchange risk reserve requirement to limit speculative positions against the rupee. Liquidity Measures: The central bank tightened daily cash reserve requirements for banks and conducted open market sales of government securities to manage liquidity conditions. Oil Sector Support: A dedicated dollar supply window was established for major state-run oil marketing companies to reduce their demand pressure in the interbank spot market.