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The Reserve Bank of India (RBI) rolled back restrictions on offshore non-deliverable forward (NDF) trading as the volatility in the rupee market eased, Deputy Governor T Rabi Sankar said on Wednesday, stressing that the measures were temporary and aimed at managing excessive market fluctuations.
Speaking to the media on the sidelines of the 25th year celebration of Clearing Corporation of India Limited, Sankar said the earlier restrictions were introduced due to heightened volatility and were not linked to the direction of the rupee. "All that was done was to deal with a temporary event that created a large volatility in the market. Once that is taken care of, we should be back on track with what we do. Our idea is that any user anywhere in the world who has an exposure to risk to the rupee should be able to access any product that is available. It was a temporary measure that had to be rolled back sometime. We did it now," he said. The RBI had imposed restrictions on April 1, 2026, on offshore NDF trading. These have now been partially rolled back, allowing authorised dealers to offer rupee derivatives to clients again. Banks can also rebook cancelled contracts, although a cap of USD 100 million on open positions continues to remain in place to manage volatility and prevent excessive speculation. Sankar said the central bank remains committed to developing a unified global market for the dollar-rupee and to the long-term goal of rupee internationalisation. On whether the central bank could reintroduce such measures if needed, Sankar said the RBI would step in only in case of excessive and disruptive volatility. "We only come in if there is excessive and disruptive volatility," he said, adding that decisions on the existing USD 100 million cap would be taken in due course. On foreign investor participation in India's bond markets, Sankar said the focus remains on improving ease of access and maintaining transparency. "Our government bond markets are among the most liquid in the world and clearly the most transparent," he said, adding that efforts are ongoing to make investment processes simpler. He also said that the RBI stands ready to act if required amid global uncertainties, including the ongoing West Asia crisis. "RBI will always take steps that are necessary to ensure that markets function well and the economy functions well. If there are stresses, we will do what is needed, just like we did during COVID," Sankar said. (ANI)
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