RBI opens dollar window for oil companies and tightens liquidity
The Reserve Bank of India (RBI) is rolling out new moves to help keep the rupee stable and make sure banks aren't overflowing with excess cash.
They've set up a dedicated dollar window for oil marketing companies through designated banks and made it pricier for certain foreign exchange hedging transactions, all in an effort to cool down demand for dollars and ease pressure on the rupee.
RBI aims to withdraw 10.4L/cr liquidity
Alongside these currency tweaks, RBI is also tightening up banking liquidity by selling government bonds and raising reserve requirements.
The idea is to withdraw surplus liquidity from the banking system (₹10.4 lakh crore on October 2).
Kotak Mahindra Bank said in its report that these steps could even push USD/INR rates below 95, but remind us that global trends will still play a big role in where things go next.