The rupee nudged to a 94.50–94.20 band against the dollar after a softer dollar index and a pullback in crude oil prices, Anindya Banerjee, Kotak Securities, said.
RBI’s latest directive now forces banks to keep 20% of the hedged amount as free cash, driving the effective hedging cost from roughly 3.5% to 5.1% and curbing speculative dollar positions.
Higher hedging costs are expected to push bond yields up and widen forward premiums, making dollar hedging more expensive for importers while offering exporters a better conversion rate for their earnings.
With crude oil hovering near $90–$120, the rupee’s trajectory hinges on oil price swings; a monthly import bill of $15–$16bn adds pressure, and RBI may step in to supply dollars for oil purchases if elevated prices persist.
Short‑term, the rupee could firm further over the next two to three days, provided the dollar index stays soft and oil prices remain below $100, but analysts warn the measures are a tactical response to the West Asian crisis, not a permanent policy shift.