What has caused anomaly in rupee forwards? Traders suspect the hand of RBI

An anomaly in India's currency forwards market is piquing the curiosity of traders. A few theories have sprung up to explain the move

An anomaly in India’s currency forwards market is piquing the curiosity of traders.

The 12-month implied yields on rupee forwards, which reflect interest-rate differentials between India and the U.S., surged to near a two-year high this month even after the Reserve Bank of India cut interest rates for a third time this year.

A few theories have sprung up to explain the move.

One version argues the advance may be related to tax payments impacting currency liquidity. While forward pricing typically represents the interest-rate differential between