Governor Sanjay Malhotra— DC File

MUMBAI: The Reserve Bank of India (RBI) would consider further steps if needed, to curb speculative trading in the foreign exchange market, Governor Sanjay Malhotra said in an interview. Clarifying on the various measures rolled out by the central bank over the weekend, Malhotra said that these measures should not be seen as capital control measures and were aimed at ensuring that forex markets serve genuine hedging needs rather than speculative bets. “The RBI is determined to do whatever is necessary to ensure orderly

movement in the foreign exchange market,” Malhotra said late Tuesday in an interview to a business portal.“Over the past few months, we have observed a very high proportion of trades being cancelled and rebooked on the same day…The high proportion of same-day cancellations and rebooking indicated a significant speculative element in the forex derivatives market. We have, therefore, taken these measures to curb such excessive speculation,” Malhotra said. He also said that he remained optimistic about India’s medium- and long-term balance of payments outlook despite market pessimism.

The RBI on Saturday fired a bazooka of measures to arrest the depreciating trends in rupee value. The rupee has fallen by 7 per cent in 2026. Firstly, it opened a direct dollar-supply window for three state-run OMCs (Indian Oil Corporation, Hindustan Petroleum Corporation, and Bharat Petroleum Corporation) shifting roughly $10-12 billion per month away from the open spot market. The OMCs are among the largest buyers of dollars in the Indian foreign exchange market because they need to pay for crude oil imports. The direct dollar window facility came into effect on October 12 and will remain in place until further notice.

The central bank also tightened rules governing forex derivatives trades, aiming to curtail speculative bets against the rupee and asked banks to create a 20 per cent reserve for dollar purchases of over $ 2 million.

It capped the currency derivative position from $100 mn to $5 mn and restricted corporates to rebook cancelled forward contracts.

The latest measures are the third phase of the RBI’s response to a falling rupee this year.

The March–April measures constrained banks’ onshore positions and onshore–offshore arbitrage. The subsequent government and RBI initiatives sought to attract capital through tax relief and wider access for foreign investors in government securities, alongside FCNR(B) deposit and external borrowing incentives.

The latest measures focus on tightening hedging discipline and relieving pressure on the regular dollar market. Meanwhile the rupee ended lower at 95.15 levels on Wednesday after testing intraday high of 94.76 in early trades.

Traders said that the RBI’s recent measures to curb speculative positions and manage oil
related dollar demand has strengthened the rupee.


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