Indian Rupee Gains 130 Paise Against US Dollar Following RBI Action to Curb Speculation

Indian Rupee Gains 1.3% as RBI Restricts Dollar Positions

On March 30, the Indian Rupee rose by 130 paise, reaching 93.59 to the dollar, a 1.3% increase from its record low of 94.85 on March 27. This surge comes as the Reserve Bank of India (RBI) takes steps to curb speculative activity and stabilize the currency.

As part of its measures, the RBI directed all banks to limit their net open position on the rupee (NOP-INR) in the onshore deliverable market to $100 million by April 10. This move is expected to lead to the unwinding of arbitrage trades, with up to $18 billion in positions being squared off by the deadline.

These arbitrage trades, built by buying dollars onshore and selling them in the NDF market, exploited the spread between the two segments. The RBI's intervention aims to mitigate the impact of these trades on the rupee's value.

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The RBI has been supporting the rupee by intervening in both the spot and offshore non-deliverable forwards (NDF) market. The rupee has fallen more than 4% since the Iran war broke out on February 28, making it one of the worst-performing units in Asia.