The Reserve Bank of India’s dollar short forward positions rose $9.2 billion to $77.6 billion in February– up 13.5% on month, according to data released by the central bank on Tuesday.
The rise in short positions can be attributed to the regulator’s forex swap, along with FX interventions to defend the rupee, according to market participants.
“The increase is mainly due to RBI’s $ 10 billion swap conducted to infuse liquidity. The net increase is slightly less than $ 10 billion and the more-than-year bucket rose only $ 8.8 billion, implying that some maturities were allowed,” said Guara Sengupta, chief economist at IDFC First Bank, adding that some intervention in the offshore market also contributed to the rise in the short forward positions.
Forex swap of $ 10 billion
The RBI conducted a forex swap of $ 10 billion on February 4 as a proactive measure to support the liquidity.
Market participants anticipate RBI’s dollar short forward positions hitting $100 billion in March, driven by aggressive offshore interventions amid significant pressure on the rupee from the West Asia war. The rupee plunged 10.96% in FY26—its sharpest drop in 14 years—making it Asia’s worst-performing currency. The rupee fell 4.24% in March alone following the war.
“The forward book has risen further in March as RBI dollar selling picked up pace post West Asia crisis. The large forward book will constrain RBI’s intervention through dollar sales, as its ability to sterilise interventions via buy-sell swaps is limited. The RBI will likely continue to lean on bond purchases through OMOs (open market operations) to sterilise its dollar sales in the spot market,” Sengupta said.
The RBI’s forward positions have been rising since October due to sustained interventions in the forward market amid significant rupee pressure from the tariff war.