RBI Curbs FX Speculation, Rupee Gains in 13 Years

The Reserve Bank of India implemented stringent measures on Wednesday to curb speculative trading in the foreign exchange market, prompting the Indian rupee to record its strongest single-day gain in 13 years against the US dollar. The currency appreciated by 1.73 paise to close at 93.10 on Thursday, following a volatile session that saw it swing between 92.83 and 95.65.

The RBI's actions targeted practices that had exacerbated the rupee's decline amid persistent pressures from foreign capital outflows and surging global crude oil prices linked to the ongoing Middle East conflict. The rupee, Asia's worst-performing currency this fiscal year, has depreciated about 10 percent against the dollar since April 2025, with an additional 4 percent drop in March alone. Officials attributed much of the weakness to speculative bets by banks and investors, including arbitrage trades that exploited price differences between onshore and offshore markets.

In its initial directive last Friday, the RBI capped banks' aggregate net open positions in the domestic market at $100 million by April 10, down from limits that previously reached 25 percent of capital. This forced institutions to unwind an...