India's Reserve Bank of India (RBI) has limited banks' net open positions in rupee foreign exchange dealings to $100 million per day, aiming to curb speculation and stabilize the currency. The measures respond to rupee depreciation driven by the Iran war, depleting reserves, rising crude oil prices, and USD-INR fluctuations.
The Reserve Bank of India (RBI) announced new regulations capping banks' net open positions in the onshore deliverable foreign exchange market at $100 million daily. This targets excessive short positions and speculative trading against the rupee, which has hit record lows due to pressures from the ongoing Iran war, elevated crude oil prices, and USD-INR volatility. Foreign-exchange reserves have been significantly depleted, prompting a shift from previous direct market interventions to these position limits. Previously, banks had greater flexibility in forex operations. The curbs apply strictly to rupee dealings, with no specified timeline for review. Financial experts view this as a proactive step to maintain stability without broader disruptions, as reported by The Economic Times.
