RBI partially withdraws April 1 directives on rupee derivatives

The Reserve Bank on Monday partially withdrew directives taken on April 1 to curb excessive speculation in rupee. Under the revised directives effective immediately, authorised dealers (ADs) can resume offering non-deliverable derivative contracts involving INR to resident or non-resident users, but have to contend with some restrictions on related party transactions. ''It has now been decided to withdraw the instructions issued (on) April 1, 2026. Further, it has been decided that authorised dealers shall not undertake any foreign exchange derivative contract involving Indian rupee with their related parties,'' the central bank said in a notification. It can be recalled that amid a huge pressure on the rupee, the central bank had taken the surprise measures to restrict speculative bets on the rupee. Two days prior, it had capped the net open positions at USD 100 million. The RBI later said the surprise measures were taken after observing positions by participants that created an artificial scarcity of the US dollar, and had promised to roll back measures. On Monday, the central bank said there will be some exceptions on the related parties front as well, which will enable authorised dealers to undertake foreign exchange derivative contract cancellation and rollover of existing contracts, and transactions undertaken with non-related non-resident users on a back-to-back basis. After the currency's sharp depreciation late last month and earlier this month, the central bank first capped NOP-INR positions in the onshore deliverable market at USD 100 million and then barred authorised dealers from offering non-deliverable forwards. The first measure helped the local currency to appreciate sharply, but gains were reversed within a few hours of trading, leading to more measures on April 1 of stopping authorised dealers from offering NDF helped the rupee significantly, and it appreciated over 2 per cent in a single day. In March, the Indian rupee saw higher depreciation pressures with the currency breaching 95 per US dollar intra-day, surpassing its previous record lows amid concerns over the West Asia conflict. On Monday, the local currency pared its initial gains and settled with a loss of 19 paise at 93.10 (provisional) against the US dollar, after fresh tension in West Asia led to an increased demand for the American currency and kept crude prices steady. At the interbank foreign exchange market, the rupee opened at 92.73 and touched an intra-day high of 92.70 against the greenback. It also hit the day's low of 93.24 during the session before settling at 93.10 (provisional) against the dollar, registering a loss of 19 paise from the previous closing level.