RBI Tightens Currency Market Curbs; Caps Bank Bets at $100 Million

MUMBAI – For the first time in 15 years, the Reserve Bank of India (RBI) has reclaimed authority from bank boards to cap speculative bets in the foreign exchange market, imposing a $100 million limit on net open positions.

The directive, effective April 10, 2026, comes as the Indian Rupee faces mounting pressure from increased oil import costs, Foreign Institutional Investor (FII) sell-offs, and international trade hurdles. By capping these positions, the RBI aims to curb one-sided market volatility that can lead to self-fulfilling currency depreciation.

Historically, banks set their own Net Overnight Open Position Limits (NOOPL)—often up to 25% of their Tier I/II capital. This shift marks a return to more rigid oversight, reminiscent of the 2011 curbs when the Rupee weakened significantly. While the RBI had previously proposed broader structural changes for 2027, the current "market conditions" have prompted this immediate, targeted intervention.