The rupee at 96, the RBI’s special window, and a week that finally went right

On October 6, the rupee fell to 96.43 per dollar, within touching distance of May’s record low of 96.97. Analysts blamed foreign selling of Indian assets and warned that the RBI could not keep resisting indefinitely. Ten days later, the rupee closed at 94.96, after its strongest weekly performance in seven months. In between, the RBI used almost every tool it has.

The toolkit

• Selling dollars directly in the market, a form of currency intervention it has used all year.
• Using sell/buy swaps to supply dollars now and take them back later, spreading the cost over time.
• Raising the repo rate to 5.50% on October 7, making rupee assets more rewarding to hold.
• On October 10, opening a special window for state-run oil companies to buy dollars directly from the RBI, so their huge purchases stop hitting the open market.

Why the oil window matters

The oil marketing companies are among the biggest buyers of dollars in India, because every barrel of imported crude must be paid for in dollars. When they buy in the market, they push the rupee down. By routing their purchases through a special window, the RBI takes that pressure out of daily trading. India used the same tool in 2013, during the “taper tantrum,” when the rupee also fell sharply, and it worked then too.

The cost

The defence was not free. Forex reserves fell to about $726 billion in the week to October 9, down nearly $13 billion in a single week and about $60 billion from their September record. Reserves are still large, enough to cover many months of imports. But the RBI has spent more of them in 2026 than in any year in recent memory, and it now has a rate hike, a swap book and a special window in play. If oil and foreign flows turn against the rupee again, it has fewer untried tools left.