The Indian rupee staged a sharp recovery on Thursday, strengthening significantly against the US dollar after the Reserve Bank of India’s aggressive measures to curb currency speculation began showing results. Market participants and analysts quickly took note of the move, with Deepak Shenoy, CEO of Capitalmind Mutual Fund, highlighting the shift in trend.
“USDINR at 93.13 – looks like RBI’s move has had an impact,” Shenoy said in a post on X, pointing to the currency’s sharp appreciation and signalling that the central bank’s intervention may finally be working.
The rupee jumped 2% to 92.8350 per dollar, marking a strong rebound after recent weakness. This came after a turbulent start to the week, when the rupee had breached the 95 per dollar mark on Monday before settling at 94.70.
In a continuation tweet, Shenoy highlighted activity in the USD/INR non-deliverable forward (NDF) market, which has been at the centre of the RBI’s crackdown. It shows interbank forward trades across various maturities, with weighted average forward exchange rates largely in the 94–95 range for April contracts.
The data also reflects significant trading volumes, with large notional amounts and multiple trades executed across different forward dates. This underscores the scale of the NDF market, which the RBI targeted due to its role in enabling offshore speculation and arbitrage opportunities that can influence onshore currency movements.
The largest notional trade is seen for April 7, with a base amount of 1,218.20 million at a weighted average forward rate of 94.5581, across 240 trades. This is followed by another large build-up on April 13, with 946.00 million in notional value at 94.7127 across 100 trades.
By restricting access to this market, the RBI effectively tightened liquidity and reduced speculative positioning, which appears to have contributed to the rupee’s sharp rebound.
RBI’s aggressive steps begin to show results
The rebound in the rupee follows a series of decisive actions by the RBI aimed at tightening speculative positions in the currency market. In a circular dated March 27, 2026, the central bank capped banks’ net open positions in the rupee at $100 million, with compliance required by April 10.
In a further escalation, the RBI barred banks from offering rupee non-deliverable forwards (NDFs) to clients and prohibited the rebooking of cancelled forward contracts. These steps disrupted a massive $149 billion-a-day market, making it one of the most stringent crackdowns in over a decade.
The central bank had earlier reduced the permissible net open position limits from 25% of capital to $100 million, before tightening norms further by restricting access to the NDF market for both resident and non-resident clients.
These measures came in response to sustained pressure on the rupee, which had depreciated nearly 4% in March alone, in addition to a 4% decline over the previous 12 months. While part of the weakness was driven by external factors such as foreign outflows and rising oil prices, analysts noted that speculative arbitrage trades had exacerbated the currency’s fall.
Shenoy’s observation reflects a broader sentiment shift in the market, where traders are beginning to acknowledge that the RBI’s actions are having a tangible impact on curbing volatility and stabilising the rupee.
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