RBI net shorts jump to $200 billion as rupee weakens
The Reserve Bank of India (RBI)'s net short forward positions soared to $200 billion in August, up sharply from $136 billion in July.
This jump occurred amid inflows from the special window for FCNR(B).
But with the rupee still losing value, "There are additions of long dollar positions, which implies sell-buy swaps. Additionally, the RBI seems to be unable to allow complete maturity of shorts, because there is depreciation pressure on the rupee," said Gaura Sengupta, chief economist, IDFC First Bank.
Longer-term short positions total $176.5 billion
Most of RBI's short positions are locked in for over a year, about $176.5 billion worth, while shorter-term bets make up much less.
Gaura Sengupta, chief economist, IDFC First Bank, points out that these moves are tied to RBI's strategy of selling dollars to steady the rupee, but warns it might get tricky for the central bank if the currency keeps sliding.