Bankers estimated around $30 billion worth of open positions have been squared off, out of $40 billion bets against the rupee. The regulator has set April 10 deadline to cut the net open position to $100 million. The Indian unit, which fell over 4 per cent against the dollar in March, following the West Asia conflict, has gained almost 2 per cent since the RBI NOP cap directive issued on March 27, 2026.
Sources said banks were seeking an extension of the deadline till last week of April, but the regulator was not in favour of giving them more time. This prompted lenders to start squaring off the remaining positions, within the stipulated timeline.
On March 27, the central bank capped banks’ daily net open forex positions at $100 million, overriding earlier internal limits linked to bank capital.
Lenders had first sought relief soon after the directive was issued, but the RBI declined to offer any concessions. Banks briefly attempted to offload positions to clients to pare losses, before a subsequent clarification on April 1 barred such transfers, mandating that positions be unwound on their own books.
The rupee appreciated for the fourth consecutive session on Tuesday, on the back of the unwinding of RBI-driven arbitrage positions by banks. Softer crude oil prices and stable dollar index further aided the local currency.
On Tuesday, the rupee appreciated up to 92.87 per dollar during the day. However, it gave up some gains by the end of the trade to settle at 92.99 per dollar, against the previous close of 93.06 per dollar.
Traders maintained caution ahead of the RBI’s policy decision and US President Donald Trump’s Tuesday night deadline for a deal with Iran. The meeting of RBI’s six-member rate-setting panel is currently underway, and the outcome will be announced on Wednesday.
“The Indian rupee extended its winning streak for a fourth consecutive session, bolstered by lower crude oil prices, a recovery in domestic equities, and the RBI-driven unwinding of arbitrage positions from the banks. The market is now in a ‘wait-and-watch’ mode ahead of the RBI policy announcement and President Trump's Tuesday night deal deadline,” said Dilip Parmar, senior research analyst, HDFC Securities.
On the other hand, government bond yields settled flat at 7.05 per cent against the previous close. The benchmark yield traded in a broad range of 7.01-7.08 per cent, torn between caution on the back of geopolitical tensions and expectations of an accommodative policy outcome.
“The market expects that the policy will be less hawkish after the statement from the finance minister,” said the treasury head at a private bank.
Finance Minister Nirmala Sitharaman had said on Monday that the RBI may have scope to lower interest rates and provide targeted support to vulnerable sectors, underpinned by the government’s prudent fiscal management. Her comments, ahead of the upcoming monetary policy review, came at a time when global uncertainties, driven by geopolitical tensions and volatility in energy markets, were likely to shape the central bank’s policy stance.
“Market participants interpreted the finance minister’s remarks as a positive signal, suggesting the RBI may tilt its policy stance more towards supporting growth, even as inflation remains on its radar,” said the treasury head at another private bank.
While the monetary policy is widely expected to maintain status quo, all eyes are on growth and inflation forecast for financial year 2026-27 (FY27) by the central bank. Most economists see average inflation to hover around 4.5 per cent in FY27.
After Standard Chartered, Morgan Stanley has cut its real gross domestic product (GDP) forecast for India by 30 basis points (bps) to 6.2 per cent for FY27 due to the ongoing conflict in West Asia. On Monday, Standard Chartered had cut FY27 GDP forecast to 6.4 per cent from 7 per cent.
 "Banks, Bank, Banking sector, Finance sector")