The Reserve Bank of India's bid to stop the rupee's drop in spot markets has so far failed, and some traders believe the central bank will turn its sight to the futures markets instead.
That is the buzz among dealers in the past few weeks, as they speculate the central bank will take steps such as lowering open interest limits in futures markets to curb speculation.
Unlike the over-the-counter forward markets, an investor does not need to own the underlying asset in futures markets, making an avenue for speculative bets.
The rupee fell to a record low against the dollar on Wednesday, falling to as low as 54.46 and breaching its earlier record low of 54.30 hit in mid-December.
The speculation was given further wheels after the Economic Times newspaper reported on Wednesday that the central bank was meeting select lenders this week to learn about the activity in the futures market and its influence on spot rupee.
Going after currency futures would be a reversal for the RBI: daily average volumes in these markets have surged to $3-4 billion since the central bank allowed the development of these markets less than four years ago.
That makes it a fairly successful product for the central bank, which has seen virtually no volumes in other products such as interest rate futures or credit default swaps.
But curbing the volumes it has encouraged over the past few years would be needed if the RBI is serious about curbing rupee volatility in forward markets, traders say.