RBI caps banks' rupee positions at $100 million citing volatility
Business
The RBI is stepping in to cool down wild swings in the Indian rupee by capping banks' net open positions in the onshore currency market at $100 million at the end of each trading day, effective April 10, 2026.
This move comes after a more than $30 billion drawdown in foreign-exchange reserves in the first three weeks of March, thanks in part to fallout from the Iran war.
Banks fear losses from unwinding trades
With the rupee hitting record lows and offshore markets making things even shakier, the RBI hopes these limits will help keep things stable and stop runaway speculation.
Banks aren't thrilled: they're concerned about losses from unwinding trades, but similar steps were taken in 2011, when the RBI tightened banks' net open position limits.