RBI limits banks' forex holdings to $100 million to steady rupee
Business
The RBI just set a new daily limit for how much foreign currency Indian banks can hold, now capped at $100 million, down from the old rule that let them use up to 25% of their capital.
This move is meant to steady the rupee, which has been sliding thanks to higher oil prices and global tensions.
Banks may sell $11-15bn foreign currency
The new rule kicks in by April 10, 2026.
While it gave the rupee a quick boost (trading at 93.59 to the dollar after the news), experts think it is only a short-term fix.
Banks are worried they may have to sell off $11 billion to $15 billion in foreign currency fast, which could hurt their profits and make trading trickier, possibly sending more action offshore and making things bumpier for the rupee in the long run.