The Indian rupee opened significantly stronger on March 30, appreciating by nearly 130 paise to 93.59 against the US dollar, following a regulatory intervention by the Reserve Bank of India aimed at curbing speculative activity in the currency market. The move comes after the rupee had slipped to a record low of 94.85 in the previous session, reflecting sustained pressure from global uncertainties and capital flow dynamics.

At the centre of the policy action is a directive requiring banks to limit their net open position in the rupee in the onshore deliverable market to within $100 million. Banks have been given time until April 10 to comply. This effectively forces market participants particularly private and foreign banks to unwind large speculative positions built around the USD/INR pair.

According to market participants, the scale of this unwinding could be substantial, with estimates suggesting that positions worth up to $18 billion may be squared off over the coming sessions. The immediate reaction in the currency reflects this technical adjustment rather than a structural improvement in macroeconomic conditions.

The RBI’s intervention follows a period of heightened volatility in the rupee, which has depreciated more than 4 percent since the escalation of geopolitical tensions earlier in March. The central bank had already been active in the market through both spot interventions and participation in the offshore non-deliverable forwards segment to manage disorderly movements. This latest directive marks a more direct attempt to address speculative excesses within the domestic banking system.

From a policy standpoint, the move indicates a calibrated shift from passive intervention to active position management. By targeting net open positions, the RBI is attempting to reduce leveraged bets against the rupee, thereby easing pressure without deploying excessive foreign exchange reserves.

However, the nature of the rebound raises important questions about sustainability. As highlighted by market experts, the current appreciation is largely driven by position unwinding rather than improvements in trade balances, capital inflows, or inflation dynamics. This suggests that while the rupee may stabilise in the near term, structural pressures could re-emerge once the technical adjustment phase concludes.