Central bank measures, intervention spark Indian rupee's sharpest rally in six months

Business Recorder reported that the Indian rupee strengthened by roughly 1 per cent on Monday, moving to 95.77 against the dollar from 96.73 on Friday. The move followed new central bank measures aimed at easing dollar demand in spot and derivatives markets, while traders said the authority likely also sold dollars through state-run banks. The gain was the rupee's strongest since April, when a similar set of steps also lifted it.

Oil companies will redirect their dollar purchases away from the spot market and hedging rules will be tightened, a shift expected to take roughly $10 billion to $12 billion of monthly dollar demand out of spot trading. Banks became more reluctant to offer forward dollar hedges to importers on Monday, as bankers said the latest forex measures raised costs and should slow a hedging rush that had weighed on the currency. Importers had pushed forward dollar purchases to record levels last month, feeding a cycle of expected depreciation, heavier hedging and further weakness.

Analysts said the recovery depends on whether balance of payments pressures subside, and ANZ expects gradual depreciation to resume once that effect fades. Hedging flows, likely tied to foreign portfolio holdings, reached the non-deliverable forward market on Monday, and more than $30 billion has left local stocks so far in 2026. India's reserves stood at $734 billion as of October 2, down from a record $785 billion in September.