The Reserve Bank of India (RBI) has relaxed some of its recent restrictions on forex trading.
It has partially rolled back curbs on offshore non-deliverable forward (NDF) trades—giving banks more flexibility to offer certain derivative contracts again.
This move is aimed at making it easier for businesses to manage currency risks.
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What Has Changed?
Earlier, banks were not allowed to offer some forex derivative contracts to customers.
Now, the RBI has withdrawn that restriction.
Banks can once again:
Offer certain derivative contracts
Cancel or rebook existing contracts
This is effective immediately and is expected to ease operational challenges for many businesses.
What Restrictions Still Remain?
Not everything has been relaxed.
The RBI has kept limits on transactions involving “related parties.”
Banks still cannot offer derivative contracts to such entities, except for modifying existing deals.
Also, the $100 million cap on open forex positions remains in place.
This shows that while the RBI is easing rules, it still wants to control excessive risk-taking.
Why Did RBI Take This Step?
According to experts, the move is meant to support genuine business needs—not speculation.
Treasury experts say earlier rules made it difficult for importers and exporters to hedge currency risks, especially when shipments or payments got delayed.
By easing the norms, the RBI is allowing normal hedging activity to resume while still keeping a check on speculative trades.
A Look at Recent RBI Actions
In late March, the RBI had tightened forex rules to control volatility.
It capped daily open positions and restricted offshore derivative trades.
These steps were taken to reduce excessive market speculation.
After these measures, the rupee strengthened from its record low of 95.12 to around 92.58 against the US dollar.
It later settled near 93.12.
RBI Governor Sanjay Malhotra had said these steps were temporary and aimed at stabilising the market.
What’s Next for the Rupee?
Market experts believe the rupee may stay within a limited range in the near term.
Support measures—like forex controls and a special dollar window for oil importers—are expected to keep volatility in check.
However, some pressure on the rupee may continue, with estimates suggesting it could move between 92.50 and 93.50 against the dollar.
The Big Picture
The RBI is trying to strike a balance.
It wants to make life easier for businesses managing currency risks, while also preventing excessive speculation.
This gradual approach shows the central bank’s focus on stability, even as it moves toward long-term goals like making the rupee more globally accepted.