RBI's net short dollar position in forwards dips to $60.29 bn by June-end

The Reserve Bank's short dollar position has declined for four consecutive months, down from its February peak of $88 billion

The Reserve Bank of India’s (RBI’s) outstanding net short dollar position in the rupee forward market dropped further to $60.29 billion at the end of June, down from $65 billion at the end of May, continuing a four-month downward trend.

 

Outstanding net short positions had peaked at $88 billion by the end of February.

 

Breakdown of forward contracts 

Of the $60.29 billion outstanding short dollar position in June, $2.5 billion was in one-month contracts, $11.8 billion in tenures between one and three months, and $25.9 billion in contracts maturing between three months and a year. The remaining $20 billion was in contracts extending beyond one year.

 

“Around $5 billion positions were set to mature in June which were delivered,” said a dealer at a state-owned bank. “We have sufficient liquidity in the system and the RBI might have delivered the $2.5 billion in July as well,” the dealer added.

 

The consistent reduction in net short forward dollar positions signals a cautious but active unwinding of forward commitments by the central bank, aligning with efforts to manage forex market volatility and maintain liquidity in the banking system.