Societe Generale’s Santosh Ejanthkar and Tanmay Purohit highlight that USD/INR fell by more than 1% after the RBI unveiled a broad FX-support package, including a dedicated oil import window and tighter restrictions on corporate hedging. They expect an initial INR rebound and lower forward premiums, but caution that the medium-term outlook will depend on oil prices, portfolio flows and broader US Dollar trends.

FX-support package underpins INR near term

“RBI surprise policy measures deflate USD/INR 1.2%.”

“In EM Asia, the INR rallied over 1% to 95.58/USD this morning following a broad set of FX-support measures announced by the RBI over the weekend, including the reintroduction of a dedicated oil import window, tighter restrictions on corporate hedging activity, limits on uncovered FX transactions, a ban on rebooking cancelled derivatives and fresh OMO bond sales.”

“Together, these steps signal a more proactive defence of the INR and complement the RBI’s recent shift toward a calibrated tightening stance.”

“While we expect an initial INR bounce and lower forward premiums as structural dollar demand eases, the medium-term outlook will remain driven by oil prices, portfolio flows and broader USD trends.”