The Indian rupee started the day nearly 10 paise higher against the US dollar as banks neared the Reserve Bank of India’s deadline to unwind arbitrage positions. Traders also monitored escalating crude oil prices amidst uncertainties surrounding the US-Iran ceasefire. The rupee was trading at 92.57 compared to its previous close of 92.66.
April 10 marks the deadline for banks to reduce excessive positions in the offshore non-deliverable forwards (NDF) market. In March, the RBI instructed banks to maintain their net open position in the rupee below $100 million daily. Despite requests for extensions, the central bank stood firm, leading banks to unwind arbitrage positions.
Analysts suggest that the market may adopt a cautious approach until there is clarity on the RBI’s guidelines regarding overnight position limits. They believe that concerns about significant rupee depreciation post-deadline might be exaggerated.
Meanwhile, global attention remains on crude oil prices. Brent crude traded at $97 per barrel, up by 1.13% from the previous close, while US WTI crude rose over 1% to $99.24 in early trading. However, prices had previously dropped by up to 20% below the $100-per-barrel mark. On the Multi Commodity Exchange, crude oil futures (April 20) hit an intraday high of Rs 9,222, marking a 3.23% increase or Rs 289.
Recently, RBI Governor Sanjay Malhotra clarified that the restrictions on banks’ foreign exchange positions and NDF offerings to clients are temporary measures to manage volatility. He highlighted increased forex market volatility, partly driven by banks’ arbitrage trades.
