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RBI Curbs Spark Forex Frenzy: Rupee Boosted!
6 Apr
Summary
- RBI curbs led to a surge in Indian companies' NDF market activity.
- Corporates captured arbitrage opportunities by exploiting FX market gaps.
- Recent RBI measures have helped to boost the Indian rupee's value.
The Reserve Bank of India's (RBI) recent regulatory actions have significantly influenced the foreign exchange market, leading to a notable boost for the Indian rupee. Curbs imposed on lenders' net onshore open FX positions prompted banks to unwind their positions, creating arbitrage opportunities.
Indian corporations swiftly capitalized on these gaps. On March 30, activity in the non-deliverable forwards (NDF) market surged to over $7 billion, a substantial increase from the average. This rush was driven by companies buying dollars domestically and selling them in the NDF market to profit from the spread.
While initially the rupee ticked up on March 30, onshore corporate dollar demand caused it to fall to an all-time low past 95 per US dollar. Following this, the RBI intensified its crackdown, barring local lenders from offering NDFs to clients and preventing companies from rebooking canceled forward contracts. These measures have since helped stabilize and boost the rupee, trading around 93 per US dollar as of April 6, 2026.
