India’s importers are now in the crosshairs of the central bank, as its latest efforts to shore up the rupee expand from financial markets to the economy.

Importers accumulated a record amount of currency hedges in September, a sign they’re bracing for more weakness after the rupee’s near 6% decline this year. Forward dollar purchases, a gauge of their demand, soared 44% to an average of $64 billion a month this year, compared with 2025, data from the Clearing Corp. of India show.

For the RBI, the surge shows why curbing speculative bets against the rupee is no longer enough. The currency slid toward 97 to a dollar even after the central bank raised $133 billion through a diaspora deposit program and lifted its key policy rate for the first time in nearly four years. A break below that mark could open the path toward 100, a once-unthinkable level, analysts said.

“The RBI believes that a lot of hedging activity, especially on the derivatives side, is speculative activity,” said A. Prasanna, head of research at ICICI Securities Primary Dealership Ltd. “They are taking steps that they think should yield some desired results, and when they find that’s not the case, they’re going to the next step. Maybe a holistic strategy is not in place yet.”In an interview to Moneycontrol late Tuesday, Governor Sanjay Malhotra said the central bank had observed a significant speculative element in currency derivatives and that forex markets were becoming “unduly pessimistic” about India’s economy.

The RBI’s moves are having an impact. The rupee jumped 0.5% to close at 95.2838 per dollar on Tuesday, adding to a 1% gain in the previous session.

The steps unveiled over the weekend take state-owned oil refiners, which need about $10 billion a month for crude imports, out of the market and make hedging more expensive for companies. The moves show how far the RBI is reaching into the $4 trillion economy to bring a currency in its ninth year of decline under control.

“The measures should keep dollar demand from oil importers out of the market and restrict demand arising from other trade flows and hedging activity,” said Ananth Narayan, a former board member of the Securities and Exchange Board of India, the capital markets regulator.

The crackdown marks a significant widening of the RBI’s defense, with some of its toughest steps since the 2013 taper tantrum now reaching firms that need dollars for daily business. A weaker rupee inflates India’s import bill while deterring foreign capital needed to finance its current-account deficit.

India’s trade deficit likely widened to about $30 billion in September, with the net oil-import bill climbing to $10.8 billion from $9.9 billion in August, according to Bloomberg Economics’ estimates.

By curbing dollar demand, the RBI aims to break that loop and tackle further currency weakness without relying only on high interest rates.

The challenge is clear in the forward market. Forward dollar purchases, largely reflecting importer activity, reached $76.8 billion in September, exceeding exporter sales of $41.3 billion, clearinghouse data show. Purchases also topped March’s $75.9 billion, a level that contributed to the RBI’s earlier sweeping measures to blunt dollar demand.

The rush to hedge also points to a deeper problem. Importers have little confidence the rupee’s slide is over after a 13% drop in the past two years. That weakness has persisted despite the central bank’s forceful interventions. Before the latest action, the RBI had limited banks’ net onshore exposure to $100 million a day. It also asked them to stop offering offshore rupee products to clients, a curb it later withdrew.

Saturday’s steps included a risk reserve requirement under which lenders must set aside 20% of the rupee equivalent for any forex derivative transaction exceeding $2 million. Canceled forward contracts can no longer be rebooked, while the limit on derivative transactions without an underlying asset was cut to $5 million from $100 million.

For companies, that means hedging the rupee will cost more. IDFC First Bank estimates the new reserve requirement could raise hedging costs by about 1.5%. Meanwhile, banks have sought clarification from the regulator on the applicability of the new norms, with dollar-rupee forward rates swinging sharply over the past two sessions.

Importers may opt for smaller hedges or shorten maturities, according to Barclays Plc. Some demand may move offshore, while firms that delay hedging may buy dollars closer to when payments are due, Citigroup Inc. economists said. While that may curb forward-market demand in the near term, it won’t reduce the need for dollars created by expensive oil and foreign fund outflows.

“The restrictions may be aimed at deterring speculative demand, but they will also have a fallout on those with genuine demand,” said Sonal Varma, chief economist for Asia ex-Japan at Nomura Holdings Inc.

While the latest measures have steadied the rupee for now, the bigger test will come if oil prices and global bond yields keeping climbing.

“These actions may deter or delay some rupee short-selling but they do not encourage capital inflows,” said Narayan. “Making reasonable forex risk management more cumbersome also reverses part of India’s decades-long market liberalization.”