06/04/2026
Affected by the relevant measures of the Reserve Bank of India (RBI), the Indian rupee continued its upward trend after posting the largest gain in 12 years. Earlier, the RBI had stepped up its regulatory efforts to curb speculative activities against the local currency.
On Monday, the rupee rose 0.3% against the US dollar to close at 92.8363. Prior to this, the rupee had already gained 1.8% last Thursday, marking its biggest single-day increase since September 2013. As banks need to close their US dollar positions by the April 10 deadline, the market expects the rupee may strengthen further, moving towards the range of 91.50 to 92.00. Notably, local markets were closed for the Good Friday holiday and no normal trading took place.
In the previous week, which was shortened by holidays, the rupee exchange rate fluctuated sharply. This volatility stemmed from regulatory measures introduced by the Reserve Bank of India (RBI) — restricting banks’ trading activities in the onshore forward market. The central bank set the upper limit of banks’ net open positions at $100 million, a rule that triggered a wave of concentrated position-closing by traders. Subsequently, the RBI further strengthened its regulation by banning banks from providing non-deliverable forward contracts (the most commonly used tool in current offshore rupee trading), and took relevant measures to prevent traders from rolling over speculative bets.
In fact, despite the RBI’s repeated interventions earlier, the rupee continued to weaken. The outbreak of the Iran War led to a sharp surge in India’s fuel import costs, which further exacerbated the depreciation pressure on the rupee. Over the past year, the rupee has fallen by 8.2% in total, once becoming the worst-performing currency in Asia. To defend the stability of the rupee exchange rate, India has used $40 billion in foreign exchange reserves in the past four weeks.
Currently, the introduction of these regulatory measures comes just a few days before the RBI announces its interest rate decision on Wednesday. This interest rate decision will be the first interest rate adjustment by the RBI since the outbreak of the Iran War. The market’s focus will be on the statement by RBI Governor Sanjay Malhotra on the rupee’s trend — after all, the aforementioned restrictive measures have caused the banking sector, the largest component of India’s stock market, to face losses and operational difficulties.
However, some analysts have put forward different expectations: if the Iran War continues to escalate, the gains previously made by the rupee may be gradually given back.
Another view holds that considering Thailand, South Korea and Singapore have a higher dependence on energy imports, and their energy imports mainly come from the Middle East, the rupee may not be the worst-performing currency in Asia by comparison.
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