Rupee surges 1% against dollar after RBI’s measures, emerges Asia’s top performer

Indian rupee rose to a stunning 1 per cent against the US dollar on Monday (October 12) after the Reserve Bank of India (RBI) eased pressure on the currency by shifting oil companies' dollar purchases away from the spot market, a move taken to curb corporate demand for forward dollars. In Monday's trading session, the rupee started at 95.76 against the US dollar, compared with Friday that closed at 96.73.

According to Reuters, the rupee emerged as one of the strongest-performing currencies of Asia on Monday. It has been among the most regional currencies moving within a narrow range. However, the rupee has lost 6.6 per cent against the dollar so far this year.

RBI unveiled a series of measures

On Saturday, the RBI unveiled a series of measures aimed at addressing two key factors weighing on the rupee. These include persistent dollar purchases by oil marketing firms amid elevated crude prices, and growing corporate demand for hedging against further currency depreciation.

Concerns over additional rupee weakness had driven importers to ramp up their purchases of forward dollars as a safeguard against potentially higher future costs. Ironically, this surge in hedging activity ended up adding further pressure on the currency itself.

The result was a self-reinforcing cycle: expectations of depreciation fuelled more hedging, which in turn deepened the rupee’s weakness and reinforced those very expectations. To break this loop, the RBI introduced several measures: barring companies from rebooking cancelled rupee-linked derivatives, lowering the threshold for transactions lacking underlying exposure, and mandating that banks maintain a 20 per cent cash reserve against certain foreign-exchange contracts. Collectively, these steps are designed to make hedging against a weaker rupee a costlier proposition.

In another significant development, India’s CPI inflation rose to 5.54 per cent in September 2026, up from 4.83 per cent in August, according to government data. In addition, food inflation climbed to 7.74 per cent, from 5.97 per cent in August.