Rupee falls after RBI partially rolls back forex curbs on derivatives

Currency weakens to 93.50 against dollar as RBI eases curbs on derivative trades, while oil prices and global factors continue to weigh on sentiment

The domestic currency declined against the dollar on Tuesday after the Reserve Bank of India eased some restrictions on banks’ arbitrage trades in rupee derivatives, partially reversing measures introduced on April 1. The rupee settled at 93.50 per dollar, against 93.12 in the previous session, down 0.4 per cent.

 

“The rupee fell as arbitrageurs resumed buying onshore and selling offshore, though the difference was limited,” said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. Despite the partial rollback of curbs, the currency is unlikely to weaken sharply, supported by measures such as a dedicated dollar window for oil companies, he said.

 

 

“The RBI’s moves would be closely watched to gauge the extent of movement it would allow. The rupee is expected in a 93–93.75 per dollar range tomorrow,” he added.

 

In a weekend speech at Princeton University, RBI Governor Sanjay Malhotra said the central bank intervenes in foreign-exchange markets when warranted but does not target an “indefensible peg,” in an apparent reference to heavy intervention in March when the rupee came under pressure amid the West Asia conflict. 

 

Market participants said the partial rollback is unlikely to have an immediate impact on the spot currency, with global factors continuing to drive direction. Pressure persists as crude oil hovers near $95 a barrel.

 

After depreciating more than 4 per cent in March, the rupee has gained 1.41 per cent so far in April, making it the fifth-best performing Asian currency in the current financial year. The currency is down 3.87 per cent so far in 2026.

 

Since March 27, when limits on net open positions in currency markets took effect, the rupee has strengthened about 1.5 per cent. Market estimates had pegged banks’ net open positions at $30 billion to $35 billion.

 

The curbs were introduced after the rupee slid past 95 per dollar to a record low in late March, amid an oil-driven shock linked to the West Asia conflict. Additional support came as oil refiners tapped a special dollar window, easing spot demand and helping stabilise the currency.

 

Under revised rules effective from Tuesday, banks can undertake certain related-party transactions, including cancellation and rollover of existing contracts and back-to-back deals. However, broader restrictions on foreign-exchange derivative transactions with related parties remain, and the $100 million cap on open positions introduced March 27 stays in place.

 

“Whatever prompted the earlier circular is no longer required, which is why they are allowing a gradual return to normal activity,” said the treasury head at a private bank.

 

The one-year forward premium fell about 30 basis points after the RBI’s announcement Monday before recovering to around 3.1 per cent on Tuesday, dealers said. In the one-month segment, the dollar/rupee NDF traded at a marginal premium of 7-8 paise over the onshore rate, compared with a gap of nearly ~1 at the peak of dislocation following the curbs.