Stories
RBI Takes Steps to Support Rupee, But Emkay Warns of Three Major Risks Ahead
- •The RBI has introduced new measures to curb speculative dollar trades and manage pressure on the Indian Rupee.
- •State-run oil companies will now source their dollar requirements through designated banks starting October 12, easing open market pressure.
- •Emkay Global highlights that despite temporary relief, three major risks including high oil demand and foreign outflows remain.
- •If Brent crude stays around 100 dollars a barrel, the current account deficit could reach 1.6 to 1.7 percent by fiscal year 2026-27.
- •While these RBI steps offer short-term support, long-term stability depends heavily on favorable foreign investment and oil import bills.
Key Questions Answered
The RBI will fulfill the daily dollar requirements of major oil companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum through designated banks starting October 12. This arrangement is expected to reduce their purchase pressure in the open market and provide temporary support to the Indian rupee.
Emkay highlighted three main concerns: India's continuous high demand for costly imported oil, unpredictable capital inflows and outflows by foreign investors, and sudden major events like rapid oil price spikes or heavy foreign investor withdrawal that could make managing the currency difficult.
According to Emkay, if Brent crude stays around $100 a barrel, India's current account deficit in the financial year 2026-27 could reach 1.6 to 1.7 percent of the country's economic size due to increased outgoing bills for foreign transactions.
