RBI Eases Forex Rules for Banks, Allows Related Party Hedging under USD 100 mn exposure cap
In April 2026, the Reserve Bank of India (RBI) withdrew some of the restrictions imposed on the forex dealers taking positions in the offshore non-deliverable forwards market (NDF) to curb rupee volatility.
Initial Restriction: On 27 March 2026, the RBI capped bank’s net bank open positions in the offshore derivatives market at USD 100 million (Mn) to control volatility.
Further Ban: On 1 April 2026, the RBI further tightened by:
In April 2026, the Reserve Bank of India (RBI) withdrew some of the restrictions imposed on the forex dealers taking positions in the offshore non-deliverable forwards market (NDF) to curb rupee volatility.
Initial Restriction: On 27 March 2026, the RBI capped bank’s net bank open positions in the offshore derivatives market at USD 100 million (Mn) to control volatility.
Further Ban: On 1 April 2026, the RBI further tightened by:
- Banning arbitrage trades,
- Prohibiting banks from offering non-deliverable forwards to corporate clients
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Reason: The restrictions were imposed to curb one-sided positioning in the rupee and tighten control over speculative flows in the foreign exchange market.
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