Rupee opens 125 paise higher as RBI clamps down on speculative bets

The Indian Rupee opened higher on Monday after the Reserve Bank of India (RBI) took one of its most forceful steps in over a decade to curb speculative bets against the currency.

 

The rupee opened at 93.56 per US dollar on March 30, compared with its previous close of 94.81 on Friday, marking a sharp gain of 125 paise, showed the Bloomberg data.  

The move follows the RBI’s March 27 directive, issued after market hours, capping the open positions that banks can hold in the onshore currency market at $100 million at the end of each trading day. The new rules, effective April 10, are expected to force lenders to unwind large positions and curb one-sided bets against the rupee.   “As the rupee was continuously falling, the RBI may have taken this step to control the fall in the rupee, which is to be done by the banks till April 10,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors.

 

 

The Banks, meanwhile, have requested the RBI to extend this date, as they have positions worth $40–50 billion, which they may not be able to square up immediately. There has been no response from the RBI so far.

 

The central bank, Bhansali believes, surely wants the open positions (which are mostly from the long side) to be curtailed and has brought down the overnight open limit, but the trend of the currency does not change with that. "We may get lower levels on the dollar to buy, which is good for importers, while exporters may now have to wait for some time to hedge further," said Bhansali.   Kunal Sodhani, head of treasury at Shinhan Bank, on the other hand, believes that by enforcing a uniform limit, the RBI is effectively forcing banks to unwind large long-dollar positions, with estimates suggesting that $10–18 billion of positions could be squared off in the near term, leading to immediate dollar selling and short-term support for the rupee. The measure, Sodhani said, also disrupts onshore–offshore arbitrage, compressing NDF spreads and reducing speculative activity. While it acts as a form of “synthetic intervention” without depleting reserves, it may tighten liquidity and increase hedging costs.

 

“Overall, the move signals clear discomfort with rupee weakness and reflects a shift from direct intervention to controlling market positioning, offering near-term stability but limited influence on longer-term fundamentals,” said Sodhani. He added that the move may lead to some appreciation in the rupee, but once the unwinding is absorbed, the currency’s trajectory will again be dictated by fundamentals such as oil prices, FPI flows, and US dollar strength.

 

On the contrary, the escalation between Israel and Iran is a clear negative for the rupee and can easily offset or even overwhelm the positive impact of the Reserve Bank of India’s NOP cap.

 

“Geopolitical shocks of this nature typically trigger a classic risk-off reaction — oil prices surge, the US dollar strengthens, and emerging market currencies like the rupee weaken. So, in reality, the geopolitical factor dominates. Even if the RBI’s move pulls USD/INR lower briefly, the conflict can push it higher again, meaning the rupee may struggle to sustain gains and could remain biased toward depreciation (93.50–96.00 range or higher if oil spikes further),” Sodhani said.

 

RBI’s action comes amid mounting pressure on the currency, which has been hitting successive record lows in the wake of the Iran conflict.

 

Over the past week, the rupee has declined around 1 per cent, extending its losing streak to a fourth straight week. Since the onset of the Iran conflict about a month ago, the currency has weakened over 4 per cent, making it Asia’s worst-performing currency this year.

 

With over $30 billion drawn down from foreign-exchange reserves in the first three weeks of March through spot and forward interventions, the RBI now appears to be pivoting towards more direct regulatory steps targeting financial institutions, according to a Bloomberg report.