The RBI stated that authorized dealers are no longer required to limit their offers of rupee-linked non-deliverable derivative contracts exclusively to resident or non-resident users.
Updated: April 20, 2026 6:35 PM IST
New Delhi: The Reserve Bank of India (RBI), on April 20, lifted certain restrictions previously imposed on forex dealers taking positions in the offshore Non-Deliverable Forwards (NDF) market, a move aimed at curbing the rupee’s volatility. This step comes just days after a statement by RBI Governor Sanjay Malhotra, in which he indicated that these restrictions would not remain in force indefinitely.
The RBI stated that authorized dealers are no longer required to limit their offers of rupee-linked non-deliverable derivative contracts exclusively to resident or non-resident users. Furthermore, they may now permit any user to re-book—or reverse—any rupee-linked foreign currency derivative contract.
However, the RBI clarified that authorized dealers are not permitted to enter into rupee-denominated foreign currency derivative contracts with related parties. The exemption is strictly limited to the cancellation or rollover of existing contracts, as well as to back-to-back transactions executed with unrelated, non-resident users. The RBI confirmed that these measures have come into effect immediately.
Banks must continue to limit their net open positions in the onshore deliverable rupee market to $100 million at the close of every business day. At the end of March, the central bank had implemented several stringent measures to prevent the continuously depreciating rupee from hitting new record lows, particularly as Brent crude oil prices surged past $100 per barrel amidst the deteriorating geopolitical situation between the U.S. and Iran. By April 10, banks had unwound speculative positions totalling approximately $40 billion in the offshore NDF market; consequently, the rupee rebounded against the dollar, recovering from its all-time low of 95.21. Speculative Trading Had to Be Curtailed
During his policy meeting, the RBI Governor stated that these measures were temporary, as the RBI had observed the build-up of speculative positions in the arbitrage market in March and had to rein in excessive volatility. The RBI noted that these measures were a response to specific developments within the market, while also adding that it remains fully committed to the internationalization of broader markets and to deepening them further.
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