Treasury desks at Tata Steel and Bharat Forge stepped up rupee forward covers this weekend, traders said, as the Reserve Bank of India’s Monetary Policy Committee prepares to meet from Monday with oil above $99 and foreign portfolio investors still net sellers of Indian equities.
The hedging push is less about a single rate call than about insulating invoice margins. Both companies earn a large share of revenue in dollars while paying for domestic wages, power and logistics in rupees. With the Nifty 50 closing at 22,421.95 on Thursday and the Sensex at 71,909.70, equity weakness has coincided with a softer rupee and costlier crude, a combination that makes unhedged export realisations harder to defend in board reviews.
Policy week meets earnings season
The MPC convenes on 5 October and will announce its decision on 7 October, with Governor Sanjay Malhotra scheduled to brief reporters at noon. Economists polled by local banks are split between a hold at 5.25 percent and a 25-basis-point increase to 5.50 percent, which would be the first hike since early 2023. Either outcome matters for exporters: a hike raises domestic funding costs, while a hold with hawkish language can still lift short-end yields and make forward premiums more expensive.
At the same time, the September-ended quarter closed on Tuesday, and consumer and industrial companies will begin reporting results within days. For metal and engineering exporters, management commentary on order books in Europe and West Asia will land alongside any RBI guidance on imported inflation. Traders at two Mumbai banks said auto-component and forging houses joined steel names in adding three- and six-month forward contracts, even though Gandhi Jayanti kept equity markets shut on Friday.
Reserves and intervention colour the hedge bid
RBI data showed forex reserves falling $18.34 billion to $747.56 billion in the week ended 25 September, with foreign-currency assets down about $15.57 billion. While the central bank does not telegraph daily intervention, the reserve drawdown reinforced market talk that officials have been smoothing rupee moves. Corporates often accelerate hedging when they believe the RBI’s tolerance band is narrowing, because sudden spot spikes can feed straight into margin guidance.
Domestic institutional investors provided some support to equities during the eight-week losing stretch, but foreign portfolio selling has dominated flows. Until that reverses, exporters worry that a risk-off global tone will keep the rupee under pressure regardless of the MPC’s rate decision. Treasury teams said they are also watching Brent, which settled near $99.43 recently, because every $5 move in crude historically feeds into India’s import bill and complicates inflation forecasts the MPC will cite on Wednesday.
What boards want before Wednesday
Chief financial officers at two listed manufacturers told InfoHandle they asked treasuries to lift hedge ratios toward the upper end of internal policy bands, not because they expect a currency crisis, but because earnings calls will otherwise spend time explaining forex hits that could have been locked in. With forward premiums volatile, some houses split orders between plain forwards and options structures that cap worst-case rupee depreciation beyond a stated level.
The next catalyst is Malhotra’s statement. Exporters will parse every line on growth, inflation and financial stability for hints on how long the RBI will tolerate rupee weakness to protect reserves. Until then, Mumbai’s forward desks expect more name-by-name hedging from firms that ship containers, forgings and flat steel—not a panic, but a deliberate response to a policy week that arrives with markets already bruised.