India tightens dollar access as central bank moves to shore up rupee

India's central bank has introduced stricter controls on dollar availability as part of efforts to defend the rupee from depreciation pressures. The Reserve Bank of India will operate a special window dedicated to meeting the daily foreign currency requirements of three state-run oil-marketing companies, effectively ringfencing their dollar needs while limiting broader market access.

The measure represents a targeted approach to managing the country's dollar demand at a time when external pressures have weighed on the rupee. By channelling oil company dollar purchases through a dedicated facility rather than the open market, authorities aim to reduce volatility and better control the rupee's exchange rate movements.

State-owned oil companies are among India's largest dollar consumers, requiring substantial foreign currency for crude oil imports and international operations. By establishing a controlled mechanism for their needs, the central bank can better forecast and manage foreign exchange outflows while supporting the rupee's stability.

The move aligns with broader efforts by Indian policymakers to address currency pressures stemming from factors including global interest rate differentials and capital flows. Similar targeted interventions have been deployed by central banks across Asia as they seek to manage currency volatility without imposing blanket capital controls.