RBI Moves to Curb Speculation
The Reserve Bank of India has imposed fresh restrictions on banks to limit speculative bets against the rupee. Lenders must cap their net open foreign exchange positions at $100 million by the end of each trading day, starting April 10. The move marks one of the strongest policy actions in years to stabilize the currency.
Rupee Pressure Triggers Policy Shift
The rupee recently hit record lows after falling over 4% in March, pressured by global uncertainties and rising oil prices linked to geopolitical tensions. Authorities have already spent billions in reserves defending the currency, prompting a shift toward stricter market controls.
Banks Face Unwinding Risks
The new rules are expected to force banks to unwind large arbitrage positions built across offshore markets. While the step may support the rupee in the short term, analysts warn it could lead to losses for lenders and increased market volatility.