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RBI eases some restrictions on rupee trades, withdraws offshore ...
The move comes after the RBI imposed a string of restrictions measures to curb halt rupee free-fall April 20, 2026 / 16:57 IST Reserve Bank of India RBI eases restrictions on forex dealers in offshore NDF marketDealers can now offer rupee derivatives to all usersBanks must cap daily net open rupee positions at $100mDid our AI summary help? The Reserve Bank of India (RBI) on April 20 withdrew some of the restrictions imposed on forex dealers taking positions in the offshore non-deliverable forwards market (NDF) to curb rupee volatility.The move comes a few days after RBI governor Sanjay Malhotra said the curbs would not remain in place indefinitely.Authorised dealers shall no longer be required to restrict offering non-deliverable derivative contracts involving the rupee to resident or non-resident users, the central bank said.They can now also permit a user to rebook any foreign exchange derivative contract involving the rupee.The RBI, however, said authorised dealers will not be allowed to enter into rupee-denominated foreign exchange derivative contracts with related parties. Exemptions are limited to the cancellation or rollover of existing contracts and back-to-back transactions conducted with non-related, non-resident users.These measures come into effect immediately, the RBI said.Banks must continue to limit their net open positions in the onshore deliverable rupee market to $100 million at the end of each business day.Late in March, the central bank came out with a string of stringent measures to halt the rupee’s free-fall towards new lows, as Brent crude surged past $100 a barrel on worsening US-Iran war.As of April 10, banks unwound nearly $40 billion of speculative trades in the offshore NDF market, with saw the rupee rebound from a record low of 95.21 against the dollar.In its bimonthly policy review, Malhotra said the measures were temporary, as the RBI had seen speculative positions being built in the arbitrage market in March and had to clamp down on excessive volatility.These were reactions to specific market developments, RBI said, adding it remain committed to the internationalisation and deepening of broader markets. Archishma Iyer Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
RBI partially rolls back curbs on rupee derivative trades
.MUMBAI: RBI on Monday partially unwound emergency curbs on rupee derivatives, signalling a shift from firefighting to restoring normal market function after a spell of currency volatility.The central bank withdrew its April 1 directive, which had barred banks from offering non-deliverable forwards (NDFs)—offshore rupee derivatives settled in foreign currency—and prevented users from rebooking cancelled forward contracts. It also eased restrictions on dealings with non-related parties.Authorised dealers can now resume NDF trades and allow rebooking but must still avoid fresh rupee derivative contracts with related entities except for rollover or cancellation of existing trades and back-to-back transactions with unrelated non-resident users.The rollback follows a sequence of interventions triggered by the rupee’s slide past 95 to the dollar in late March. Initial measures sought to cap arbitrage and speculative positioning by limiting banks’ net open positions and tightening rules around derivatives. When those curbs proved insufficient with banks reportedly shifting exposures to corporates and affiliates, the RBI escalated restrictions on April 1, targeting related-party transactions and offshore instruments such as NDFs. Those tighter controls achieved their immediate aim. The rupee rebounded about 2% and has since traded in a narrower band of 92.50–93.50. With volatility contained and positions largely unwound, the RBI appears to be recalibrating.The latest move suggests the central bank wants to restore hedging flexibility for genuine users while retaining guardrails against speculative or circular trades that amplify volatility. Limits on banks’ net open positions continue, and scrutiny of relatedparty transactions persists.The central bank’s rationale points to concerns over market conduct as much as currency stability. An unusual surge in high-volume related-party transactions had created artificial shortages and distorted price discovery. One of the rationales for the measures was that market makers are expected to meet client needs and not exploit liquidity access for proprietary gains. Earlier liberalisation had relaxed documentation requirements for hedging, but not to the extent of permitting unlimited round-tripping or profit-driven trades without underlying exposure.
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