Daijiworld Media Network – New Delhi

New Delhi, Mar 30: In a decisive move to stabilise the falling rupee, the Reserve Bank of India has imposed fresh curbs on speculative trading by banks, marking one of its strongest interventions in over a decade.

Under new rules announced late Friday, banks will be restricted from holding open positions exceeding $100 million in the onshore currency market at the end of each trading day. The directive, set to come into effect from April 10, is aimed at limiting large one-sided bets against the rupee.

The move comes amid growing concerns over the currency’s sharp decline, which has hit successive record lows following geopolitical tensions linked to the Iran conflict. The pressure has already forced the RBI to dip heavily into its reserves, with over $30 billion reportedly drawn down in the first three weeks of March through spot and forward market interventions.

Market experts say the latest step signals a strategic shift by the central bank from direct intervention towards controlling market positioning.

“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 Kunal Sodhani, head of treasury at Shinhan Bank in Mumbai.

Meanwhile, banks have reportedly sought more time to comply with the directive, warning that a rapid unwinding of existing positions could lead to significant losses. According to sources, outstanding speculative positions may total at least $30 billion.

Reflecting the immediate impact, offshore dollar-rupee forward points surged early Monday, indicating a rush among traders to square off positions ahead of domestic market opening in Mumbai.

The RBI’s latest action underscores increasing urgency to defend the rupee as global uncertainties and capital outflows continue to weigh on the currency.