The Rupee (INR) could strengthen by as much as 100 paise against the US Dollar (USD) on Monday as last Friday’s RBI direction to Banks, which are authorised to deal in foreign exchange, will require them to unwind their long Dollar positions in the domestic forex market.
The Direction, which was issued after market hours on March 27th, asks Authorised Dealers to ensure that their Net Open Position – Indian Rupee (NOP-INR) in the onshore deliverable market should be maintained within US$ 100 million at the end of each business day.
This comes in the backdrop of the Rupee weakening about 4 per cent since the West Asia war began on February 28, 2026. It could reduce large bets against the Indian currency and prevent sharp movements The last time the central bank issued such a directive was about 15 years back.
K Arvind, Head – Treasury, Tamilnad Mercantile Bank, said: “Banks’ holding long position adds to the demand for Dollars. So, RBI wants them to reduce the net open position to within $100 million.
“Therefore, banks will exit their long positions in the domestic deliverable market. So, they will have to automatically reduce their short position in the NDF (non-deliverable forward) market also.” He expects the Rupee to open almost 100 paise stronger and close below the 94/ USD level on Monday.
Market experts say large banks, especially in the private sector, and some foreign banks could feel the heat of the RBI’s latest move as they have trading desks to exclusively arbitrage between the domestic deliverable and NDF market. According to market estimates the cumulative NOOP of these Banks could be around $40 billion.
Since the Net Overnight Open Position Limit (NOOPL) is set at 25 per cent (ceiling) of the total capital (Tier I and Tier II capital) of the Authorised Dealer, the aforementioned banks could suffer losses as they not only have to unwind their positions in the domestic and NDF markets even as they face the prospect of the RBI intervening in both the markets Monday.
RBI said Authorised Dealers have to ensure compliance with its directions on NOP-INR at the earliest but no later than April 10, 2026, according to the central bank.
The Rupee closed at a new low of 94.8125 per US Dollar, down about 84 paise against previous close of 93.9775. The raging war in West Asia continues to have a deleterious effect on the Rupee amid rising global crude oil prices, continuous FPI-related outflows from the equity markets and a strengthening Dollar.
Published on March 29, 2026
