Amid sustained rupee pressure and surplus banking-system liquidity, the RBI announced measures on October 9–10 to support the INR and strengthen liquidity management. These include a special USD window for public-sector OMCs, a Foreign Exchange Risk Reserve (FERR), tighter FX-derivative restrictions, an OMO sale and higher daily CRR maintenance requirements.
The OMO sale will provide modest direct liquidity absorption, while the higher daily CRR floor primarily restricts banks’ intra-fortnight liquidity-management flexibility. The OMC window could provide immediate spot-market relief by redirecting sizeable dollar demand from the regular FX market to the RBI, although its implications for rupee liquidity and FX reserves will depend on the operational structure.
The FERR and associated derivative restrictions could moderate forward-dollar demand but potentially increase customer hedging costs. Overall, the measures should ease near-term INR pressure and strengthen liquidity management, although sustained rupee recovery will depend on crude oil prices, foreign capital flows and broader global financial conditions.
