Banks must keep net open rupee positions within $100 million by April 10 to limit excessive currency bets
Banks with higher exposure may need to sell dollars, which could support the rupee but trigger mark-to-market losses
Rising crude prices, FPI outflows, and geopolitical tensions have pushed the rupee to a record low of 94.84/$, with risks of breaching 95
The Reserve Bank of India (RBI) has stepped in with a targeted directive for banks to curb the sharp fall in the rupee. It has asked banks to cap their net exposure to the rupee at $100 million by the end of each trading day, starting April 10.
In simple terms, banks can no longer carry large positions that profit from the rupee weakening or strengthening. This gives the central bank more control over excessive speculation that can destabilise the currency.
2 March 2026
Get the latest issue of Outlook Business
“The Reserve Bank may prescribe limits for open positions involving the rupee (NOP-INR) for exchange rate management, depending on market conditions,” the directive read.
“Accordingly, it has now been decided that Authorised Dealers shall ensure that their NOP-INR positions in the onshore deliverable market are maintained within US$100 million at the end of each business day," it added.
A net open position (NOP) reflects the gap between a bank’s dollar purchases and sales, higher positions indicate bigger bets on currency movements. With the new directive, the RBI is trying to prevent large, one-sided trades that can amplify volatility.
Dollar Sell-Off Ahead
As per a report by The Economic Times, most large and mid-sized banks with net open positions exceeding $100 million are expected to sell dollars to comply with the directive. However, such compliance is likely to result in mark-to-market losses for banks, even though the unwinding of dollar positions could support the rupee.
The report said banks had lobbied the central bank to apply the rule only to incremental positions after April 10, as aggregate net open positions are estimated at $40 billion.
Traders said that if the gap between rupee-dollar rates in the offshore non-deliverable forwards (NDF) market and the onshore market widens to Re 1, banks could face losses of up to ₹4,000 crore.
Rupee Under Pressure
Amid rising geopolitical tensions and inflationary pressures, the rupee has been depreciating faster than expected, with the domestic currency hitting a lifetime low of 94.84 per dollar on Friday. Excess demand for dollars has been driven by importers’ purchases due to a surge in crude oil prices, as well as continued foreign portfolio investor outflows from Indian markets.
The rupee has fallen nearly 3.5% against the greenback since the war broke out on February 28. In FY26, the currency has depreciated around 10%.
Forex traders and analysts have warned that the rupee could breach the psychologically crucial level of 95 per dollar by the end of April if the West Asia conflict prolongs. Even in the event of a conflict resolution, traders expect the rupee to remain under pressure, likely stabilising in the range of 93.50–94.30 against the dollar.
Some market participants also factor in the possibility of the domestic currency quickly weakening to the 96–97 per dollar range in April if crude oil prices remain elevated.
