RBI Eases Some Rupee Trading Restrictions, Keeps Key Limits Intact

The Reserve Bank of India (RBI) has partially rolled back some of the emergency restrictions it imposed earlier this month on rupee derivative trades.

The announcement is seen as a sign that the central bank believes the immediate pressure on the rupee has reduced. That’s why it has allowed some normal market activity to resume while still keeping safeguards against high speculation.

What Has Changed?

The Reserve Bank of India had imposed several restrictions on 1 April 2026, after the rupee lost value and reached an all-time low against the dollar as a result of geopolitical tensions and rising oil prices. Now, it has removed a few of those curbs.

1. Non-deliverable forwards (NDF) offered by banks

Banks had earlier been barred from offering rupee-linked non-deliverable forwards to clients.

That restriction has now been removed. This means banks can again offer these hedging products to eligible users.

2. Rebooking of cancelled forward contracts

Users had also been stopped from rebooking cancelled foreign exchange forward contracts after 1 April 2026.

That restriction has now been rolled back, too.

What Curbs Still Remain?

The RBI has still kept some of the restrictions in place.

1. Related-party rupee derivative trades remain restricted

Even though limited exceptions have been allowed, banks are still barred from entering rupee derivative contracts with related parties.

Permitted transactions include the cancellation and rollover of existing contracts. Back-to-back trades with non-related non-resident users are allowed, subject to rules.

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2. $100 million net open position cap still active

The cap on banks’ net open rupee positions at $100 million in the onshore market remains in place. This is important because it continues to limit oversized speculative currency positions.

One interpretation of the partial rollback by RBI on the restrictions to rupee trading is that the central bank sees the risk of a market collapse has lessened for the time being. In reinstating a few hedging instruments while preserving the anti-speculation measures, RBI appears to be attempting to maintain the market's stability along with its smooth functioning.

Sources:

The Hindu

Business Standard