On April 1, RBI ordered banks that now they cannot offer NDFs denominated in rupees to any client, whether Indian or foreign. This made it difficult to speculate easily on the rupee in the foreign market, which strengthened the rupee as old deals were being reversed. Due to this decision of RBI, there was a record rise in rupee today. Rupee has become so strong in one day after 12 years.
Banks continued to reduce their offshore long dollar positions after the RBI order, pushing the rupee up 1.8 per cent to 93.17 against the dollar, its biggest gain since September 2013. On April 1, RBI barred banks from offering rupee non-deliverable forwards (NDF) to resident and non-resident customers. It also said that companies cannot re-book canceled foreign currency derivatives.
In a Moneycontrol report, Amit Pabari, Managing Director of CR Forex Advisory, said that in the near future, there is a possibility of reducing such positions, which will reduce the artificial demand for dollars and support the rupee. This may strengthen the rupee or at least increase its stability.
FY26 was the worst year for the rupee in more than a decade, mainly due to several things, such as the rise in Brent crude prices and continued withdrawal of funds by foreign investors. On March 30, the currency briefly crossed the psychological level of $95 even as the RBI took steps to cap banks' net open positions on the rupee. Crude oil prices rose nearly 4 percent after US President Donald Trump in his address to the nation hinted at an intensification of the Iran war, but did not give any timeline for ending the war. This war is going on in its second month.
Although he claimed that the US has achieved its war goals, Trump indicated that if Iran does not accept America's conditions during negotiations, the conflict could escalate and Iran's energy and oil infrastructure could be attacked. After Trump's address, the price of Brent crude increased rapidly to $ 106 per barrel. Donald Trump said that I can say tonight that we are on track to soon accomplish all of America's military goals. We are going to attack them very strongly in the next two to three weeks. We will transport them back in time to where they actually belong.
