The Reserve Bank of India (RBI) has relaxed some of its recent restrictions on forex trading, especially in the offshore non-deliverable forwards (NDF) market.
In simple terms, banks can now again offer certain derivative contracts to customers.
They are also allowed to cancel or rebook these contracts if needed.
This move comes as a relief for businesses and market participants who rely on such tools to manage currency risks.
What Has Changed — And What Hasn’t
The RBI has rolled back its earlier rule that restricted banks from offering some forex derivative contracts.
However, not everything is fully open.
Restrictions still apply when it comes to “related parties.”
Banks cannot offer new derivative contracts to such entities, except for adjusting or extending existing ones.
Also, the $100 million cap on open forex positions remains in place.
This shows that RBI is easing rules, but still being cautious.
Why Did RBI Take This Step?
The main goal is to support genuine business needs without encouraging risky speculation.
According to market experts like Kunal Sodhani, the move allows normal hedging activity to resume—especially for importers and exporters who deal with currency fluctuations.
Earlier restrictions made it difficult even for genuine transactions.
For example, if shipment timelines changed, businesses couldn’t easily adjust their contracts.
This created practical challenges, which the RBI has now tried to fix.
A Quick Look at Recent RBI Moves
The RBI had tightened forex rules in late March and early April.
On March 27, it capped banks’ daily open rupee positions at $100 million.
Soon after, it also restricted offshore forex derivative contracts for both residents and non-residents.
These steps helped strengthen the rupee from its low of 95.12 to around 92.58 against the US dollar.
It later settled at 93.12.
RBI’s Bigger Strategy
RBI Governor Sanjay Malhotra had earlier explained that these restrictions were meant to control excessive speculation.
Too much speculative trading can increase volatility and disturb fair price discovery in the market.
He also made it clear that such measures are temporary and depend on market conditions.
At the same time, the RBI continues to focus on the long-term goal of making the rupee more globally accepted.
What Happens to the Rupee Now?
Experts believe the rupee will stay within a limited range in the near future.
Factors like forex rules and a special dollar-buying window for oil companies are helping control sharp movements.
According to Anil Kumar Bhansali, the rupee may trade between 92.50 and 93.50, with a slight weakening trend.
The Bottom Line
The RBI is trying to strike a balance.
It wants to support genuine business activity while keeping speculative risks under control.
For now, the easing of rules is a positive step for companies dealing with foreign exchange—without fully opening the door to volatility.
