Rupee At 92.57 Against Dollar As RBI Deadline Drives Bank Position Cuts

The Indian rupee strengthened slightly in early trading on Friday, rising close to 10 paise as banks moved to adjust their positions before a regulatory deadline set by the Reserve Bank of India.

In early trading, the rupee stood at 92.57 per US dollar, strengthening slightly from its previous close of 92.66.

The movement comes as 10 April marks the final day for banks to reduce excess exposure in the offshore non-deliverable forwards (NDF) market.

In March, the central bank had instructed that lenders must keep their net open positions in the rupee within $100 million at the close of each trading day.

Despite requests from some banks for additional time, the RBI chose not to extend the deadline, leading to the unwinding of arbitrage trades.

Market participants indicated that trading may remain cautious until further clarity emerges regarding rules on overnight position limits.

Some analysts also suggested that fears could exaggerate a sharp depreciation in the rupee after the deadline.

At the same time, developments in global oil markets continued to influence sentiment.

Brent crude was trading at $97 per barrel, up 1.13 per cent from the previous close. US West Texas Intermediate (WTI) rose by more than 1 per cent to $99.24 in early trade.

Earlier, crude prices had fallen to nearly 20 per cent below the $100-per-barrel level.

On the Multi Commodity Exchange, crude oil futures for 20 April delivery reached an intraday high of Rs 9,222, gaining Rs 289 or 3.23 per cent.

Earlier in the week, Sanjay Malhotra, Governor of the Reserve Bank of India, described the restrictions on banks’ foreign exchange positions and limits on offering NDF contracts as temporary steps. He noted that increased volatility in the currency market had been observed recently, partly due to arbitrage activity by lenders.