Why has the RBI asked state-run oil refiners to curb spot dollar buying, and what alternative is being offered?

The RBI has asked state-run oil refiners to curb spot dollar purchases to ease pressure on the rupee, which has fallen more than 3% to record lows this year—making it Asia's worst-performing major currency—due to surging oil prices and heavy foreign portfolio outflows. As major buyers of dollars for oil imports, refiners’ spot demand exacerbates rupee depreciation; to mitigate this, the RBI is reviving a special credit line (used earlier during the Ukraine war) that refiners can access via the State Bank of India (SBI), India’s largest state-backed bank. Refiners—including Indian Oil Corp, Hindustan Petroleum Corp, and Bharat Petroleum Corp, which together control about half of India’s 5.2 million barrels per day refining capacity—can either buy dollars at the RBI reference rate or draw on this credit line for their foreign exchange needs.

How is the RBI’s intervention expected to stabilize the rupee, and what other recent measures has it taken?

The RBI’s intervention aims to reduce dollar demand from state oil refiners in the spot market, thereby easing downward pressure on the rupee; funneling their FX transactions through SBI—already handling sizeable merchant flows—is also intended to minimize overall market impact. Alongside this, the RBI has implemented several crisis-era measures over the past two weeks, including clamping down on arbitrage trades deemed to worsen volatility, banning Indian banks from offering corporates non-deliverable forward (NDF) contracts, and selling dollars from its foreign exchange reserves. These steps have contributed to a ~2% rupee recovery from its all-time low of over 95 per dollar in late March—when spillovers from the Iran conflict intensified concerns—bringing it to 93.20 per dollar as of Thursday.

India's RBI Asks State Oil Refiners to Curb Spot Dollar Buying, Sources Say

Apr 16, 2026

India's central bank has urged state-run oil refiners to utilize a special credit line rather than spot dollar purchases to alleviate pressure on the rupee amidst high oil prices and capital outflows.

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