RBI Just Hit ‘Undo’ on Forex Curbs, But Is the Rupee Safe Yet?

The Reserve Bank of India (RBI) seems to be shifting gears again. After imposing strict curbs earlier this month to stop the rupee’s sharp fall, the central bank has now partially rolled back those restrictions.

This move signals that the RBI believes the worst of the volatility may be over. But at the same time, it hasn’t fully removed all safeguards, which raises an important question: Is the situation really stable, or is RBI just testing the waters?

Why Did RBI Impose Curbs in the First Place?

In late March 2026, the rupee came under heavy pressure and even slipped past the 95 per dollar mark, triggering panic in currency markets.

To control this, the RBI rolled out emergency measures in phases:

• Capped banks’ net open forex positions at $100 million
• Banned non-deliverable forwards (NDFs)
• Stopped rebooking of forex derivative contracts
• Restricted related-party derivative trades

These steps were aimed at curbing speculative and arbitrage trades, which were worsening volatility instead of stabilising the currency.

What Has RBI Relaxed Now?

With the rupee stabilising around the 92.5–93.5 range, the RBI has begun easing some of these restrictions.

Here’s what’s been allowed again:

• Banks can once again offer NDF contracts to clients
• Companies can rebook cancelled forex derivative contracts
• Certain transactions with non-residents are permitted on a back-to-back basis

This essentially restores flexibility in the forex market and allows businesses to hedge currency risk more efficiently.

What Restrictions Still Remain?

The rollback is only partial, and that’s where things get interesting.

The RBI has deliberately kept some guardrails in place:

• Ban on most related-party derivative trades still continues
• $100 million cap on banks’ net open positions remains

This shows that while the RBI wants to normalise market activity, it is not willing to let speculative trades creep back in too quickly.

What Does This Mean for the Rupee?

The rollback reflects a shift from “crisis control” to “controlled normalisation.”

• The earlier curbs helped the rupee recover nearly 2% from its lows
• Now, easing rules could improve liquidity and market efficiency
• However, global risks, like oil prices and geopolitical tensions, still loom large

In fact, early market reactions suggest the rupee may remain range-bound rather than strongly appreciating.

Conclusion

The RBI’s move is a balancing act. It wants to restore normal trading activity without reopening the door to excessive speculation.

In simple terms:
The central bank is saying, “You can trade again, but don’t get reckless.”

Whether this strategy works will depend less on policy tweaks and more on global factors driving the rupee. For now, stability has returned, but certainty is still missing.