Rupee posts strongest daily gain in over six months

The Reserve Bank of India’s weekend currency measures were followed by a sharp rise in the rupee on Monday, October 12, with the currency closing at 95.75 to 95.78 per US dollar, up 95 to 96 paise from Friday’s 96.73 close. The move was its strongest single-day gain in more than six months, according to market reports. The measures included a direct dollar-supply window for oil marketing companies and tighter rules for foreign-exchange derivatives and hedging. The RBI’s window for three state-run oil companies took effect on October 12 and will remain in place until further notice, one report said. The companies were identified as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation. The dollar window is intended to shift oil companies’ dollar purchases away from the spot market. An estimate in the reporting put the potential diversion at $10 billion to $12 billion in monthly demand; that figure is an estimate, not a reported realized reduction. Oil companies need dollars to pay for crude imports.