It’s been a sharp swing for the rupee today. After a 1% rally in early trade, it slipped to 95 per dollar levels – its all-time low and on course for its worst monthly drop since March 2020.
The currency opened at 93.58 against the US Dollar and slipped towards the 95.22 mark during the closing of trade but ended at 94.83, nearly unchanged from its Friday’s record low. Traders quoted by Reuters cited that RBI likely sold dollars to help limit the rupee’s fall.
Worries over soaring oil prices and sharp slide across domestic indices put the Indian rupee on course for its worst decline since March 2020.
“Rupee makes a new low of 95.22 as NDF positions continued to be squared,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Advisors.
Why the rupee is still under pressure despite RBI’s move
So far in 2026, the domestic currency has depreciated by over 10%, marked by surging fuel prices and outflow of foreign equities from the country. As per reports, the central bank’s latest move is targeted to cut down on speculative long dollar positions and prevent the rupee from excess volatility.
According to Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank, the RBI’s action is aimed at curbing speculative activity on one-way trades against the INR. She expects that unwinding of short NDF (non-deliverable forward) positions will strengthen the currency, easing onshore forwards premia.
“However, given that overall sentiments still remain weak, we expect importer demand and capital outflows will continue to weigh on INR outlook,” Bhardwaj adds.
Experts warn RBI move may not stop further rupee fall
Echoing the same sentiment, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Investments, says that while the central bank’s development mildly reprieves the currency, it is not significant enough to prevent future weakness.
“A significant development today is the mild strengthening of the rupee by about 50 paise in response to the RBI directive capping the net open position (NOP-INR) in the offshore deliverable market at $100 million. Unwinding of the large dollar positions is contributing to rupee appreciation,” the economist says.
However, he adds that while the RBI directive will curb excessive speculation in the futures market, this is not sufficient to prevent weakness in the currency, which stems from the rising trade and CAD triggered by the spike in crude and sustained FPI selling in the market.
So what exactly caused the sharp swing for the currency?
On Friday, RBI directed banks to limit their net open rupee positions in the onshore markets to $100 million at the end of each business day. All authorised forex dealers are asked to comply with the same by April 10.
Prior to this, banks were allowed to set their own limits, up to 25% of their total capital. Experts have said that the move came in to reduce speculative activity and help maintain the currency’s volatility amid the soaring oil prices.
But economists have questioned whether the move will actually help cushion the currency’s fall, which has fallen by over 4% since the beginning of the West Asia conflict.
Banks may still gain despite forced unwinding
As the directive came in, sources told FE that banks have approached RBI to ease its forex position limit and also sought an extension of April 10 to meet these conditions.
“Banks have requested to either extend the deadline or consider the new non-deliverable forward (NDF) positions, exempting the outstanding ones. This will help banks to curb their losses from sudden unwinding of the positions,” said a banker to FE.
However, research analyst Sandip Sabharwal, in a social media post on X, pointed out that banks would still remain profitable while unwinding positions, as today’s (March 30) exchange rate is still lower than what it was on Thursday.
“The entire hypothesis that banks are going to make huge losses in unwinding speculative INR positions as per the recent RBI guidelines is deeply flawed.
USDINR today is lower than what it was on Thursday. Any unwinding as of now will still be profitable.”
Domestic currency markets were closed on Thursday on account of Shri Ram Navami, but as per reports, the currency had breached the 94-level mark in offshore markets on Thursday, following which it closed at a record low of 94.81 against the US Dollar on Friday.
Remarking sarcastically, he added that overanalysis leads to paralysis is the best that can be said for many armchair economists/strategists.
On March 31, domestic currency derivatives markets will remain shut on account of Shri Mahavir Jayanti.
What lies ahead for the rupee? Key levels to watch
Analysts at CR Forex Advisors say that the overall picture for the rupee remains delicate, with rising oil prices, ongoing geopolitical tensions, and a strong dollar environment continuing to keep pressure on the currency.
“However, the timely action by the RBI could provide much-needed breathing space in the near term, as position unwinding offers temporary support. From a technical perspective, the 92.50–92.80 range may act as a support zone if this unwinding continues, while the 94.80–95.00 levels are likely to remain a key resistance area,” they added.