RBI Caps Rupee Open Positions At $100 Million
The Reserve Bank of India has capped banks’ net open positions in the rupee at $100 million in the onshore deliverable market, in a move aimed at containing currency volatility after the rupee fell to a record low against the US dollar. The step comes as pressure on the Indian currency has intensified amid higher crude prices and broader market stress linked to the West Asia conflict.
RBI Caps Net Open Positions In Rupee Market
The RBI has directed banks to keep their net open position on the Indian currency, or NOP-INR, within $100 million at the end of each business day. The rule applies to authorised forex dealers in the onshore deliverable market and marks a tighter intervention than the earlier framework, under which banks had more flexibility in setting limits.
Banks Asked To Comply By April 10
The central bank has asked authorised forex dealers to comply with the new rule by April 10. Market participants expect the move to reduce speculative long-dollar positions held by banks and help limit sharp swings in the rupee. The measure is being seen as a direct response to recent instability in the currency market.
Rupee Pressure Triggers RBI Response
The RBI’s action follows the rupee touching a record low against the dollar as rising crude prices and market uncertainty increased pressure on India’s external position. Since the West Asia conflict escalated, the currency has come under added stress, with oil prices and foreign outflows worsening sentiment. The central bank’s latest move is intended to steady the market and prevent excessive one-way positioning.
