India bars rupee NDFs
India’s central bank moved to bar banks from offering clients rupee non‑deliverable forwards after earlier steps failed to stabilize the currency, tightening controls to curb speculation. — the restriction narrows hedging channels and could create measurable arbitrage and volatility around on‑shore vs. off‑shore flows. (reuters.com)
A.P. (DIR Series) Circular No. 03 dated April 1, 2026 formally instructed Authorised Dealers that non‑deliverable derivative contracts involving the Indian rupee must not be offered to resident or non‑resident users. (banklaw.in) The RBI’s notice also forbids rebooking of cancelled forex derivative contracts and bars authorised dealers from entering rupee derivative transactions with related parties. (bloomberg.com) Separately, the central bank capped banks’ net open rupee positions at $100 million at the end of each business day, a limit the RBI said will take full effect on April 10, 2026. (bloomberg.com) The offshore non‑deliverable forward (NDF) market for the rupee trades roughly $149 billion a day—about twice onshore volumes—concentrated in Singapore, London and other FX hubs, amplifying the potential market‑structure impact of the curbs. (bloomberg.com) The rupee breached an intraday record near 95.2 on March 30 and settled around 94.8 before rallying to roughly 93.1 after the RBI’s package of curbs was announced. (business-standard.com) Bank and sell‑side research warns the measures will widen onshore‑offshore basis spreads and force unwind of arbitrage books; MUFG said the restrictions raise “bifurcation” and could force banks to sell dollars to close positions around the April 10 net‑open deadline. (mufgresearch.com) The Finance Ministry signalled public backing for the RBI’s actions, with government sources saying authorities support steps to curb speculative flows amid the currency’s recent declines. (moneycontrol.com)
