Rupee Records Sharpest One-Day Rise in Over 12 Years After RBI’s Tough Crackdown on Offshore Derivatives The Indian rupee surged sharply against the US dollar on Wednesday, marking its strongest single-day gain in over 12 years. This dramatic shift followed the Reserve Bank of India’s (RBI) stringent measures targeting offshore derivatives, which aimed to stabilize the currency’s volatile trajectory. The rupee climbed nearly 2% against the dollar, reaching a high of 92.82 per dollar, a level not seen since September 2013. This development comes amid a recent decline in the rupee’s value, which had previously hit a psychological barrier of 95 rupees per dollar in the previous week. The RBI’s intervention was announced on Wednesday, with immediate effect, to curb the excessive exposure of authorized dealers to offshore derivative markets. The central bank mandated that authorized dealers—banks authorized to conduct foreign exchange transactions—no longer offer non-deliverable forward (NDF) contracts to both resident and non-resident customers. These NDFs, which are cash-settled derivatives, had been a significant factor in the rupee’s recent depreciation, as they allowed investors to hedge against currency risks. By restricting these contracts, the RBI sought to reduce speculative pressures on the currency. Despite the ban on NDFs, the RBI allowed authorized dealers to continue offering deliverable foreign exchange derivatives, ensuring that customers could still manage their currency risks. However, a key condition was imposed: customers could not engage in parallel non-deliverable trades. This move aimed to prevent arbitrage opportunities that had previously exacerbated the rupee’s volatility. The rupee’s sharp rebound followed a period of significant weakness.#us_dollar #reserve_bank_of_india #rupee #non_deliverable_forward #authorized_dealers
Biggest Surge In 12.5 Years: How RBI Is Saving Rupee From Iran War Jitters The Indian rupee experienced its most significant gain in over 12 years on Thursday, surging 1.3 percent to around Rs 93.53 per dollar. This marked the strongest rally since September 2013, driven by the Reserve Bank of India’s (RBI) aggressive measures to counter the currency’s earlier decline. The rupee had previously hit record lows against the US dollar, exacerbated by global factors such as rising oil prices and the ongoing Iran conflict. Despite these challenges, the RBI’s interventions stabilized the market, reversing months of pressure on the currency. The rupee’s sharp decline earlier in the year was attributed to heightened geopolitical tensions in the Middle East, which disrupted global oil markets and increased inflationary pressures. As oil prices climbed, the rupee weakened further, falling below the critical 95 mark against the dollar. However, the RBI’s decisive actions in the past weeks have since reversed this trend, with the currency’s rebound reflecting the central bank’s efforts to restore confidence. The RBI’s strategy involved a series of targeted measures aimed at curbing speculative activity and stabilizing the forex market. Key steps included capping banks’ open foreign exchange (FX) positions at $100 million to limit excessive speculative bets. Additionally, the central bank banned banks from offering rupee non-deliverable forwards (NDFs), which had been used to exploit the price gap between onshore and offshore markets. This move was designed to prevent offshore-onshore arbitrage, a major driver of volatility. Another critical measure was the prohibition of re-booking cancelled forward contracts.#iran_war #reserve_bank_of_india #rupee #foreign_exchange_reserves #siddharth_maurya
