The rupee climbed 128 paise from its all-time low to 94.80 against the US dollar in early trade on Monday after the Reserve Bank of India (RBI) intervened to curb speculative positions.
The Central Bank directed banks to limit their net open position (NOP-INR) in the foreign exchange market to $100 million, with compliance required by April 10. Investors said the rupee opened stronger as banks, which generally hold long positions, began cutting their exposure in the onshore currency market following the RBI directive.
Through a circular issued on March 27, the RBI capped the Net Open Position for banks at $100 million. The regulator may set different limits depending on evolving market conditions.
According to latest market trends, the rupee rebounded 1.4 per cent to 93.59 against the dollar due to the RBI’s intervention. The magnitude of these open positions is estimated to range between $25 billion and over $50 billion.
In March, the rupee fell more than 4 per cent amid geopolitical tensions. On Friday, it declined nearly 1 per cent to 94.8125, touching an intra-day low of 94.8400.
Analysts said concerns over rising crude oil prices for a prolonged period are weighing heavily on the currency and the broader macroeconomic outlook.
“With the West Asia conflict entering the fifth week, there are signs of escalation, including the Houthis joining the conflict and the US sending additional troops. Brent crude has surged again to around $116 per barrel, while US WTI futures stood at $103.38, up 3.75 per cent from the previous session,” they said.
Also read: Rupee in free fall, slumps to 94.70 against US dollar
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