Rupee Defence by RBI Tightens Banking System Liquidity
Why in the news
RBI’s forex-market battle to hold up the rupee is pulling cash out of banks, worrying economists and traders about rates and growth.
Key facts
- Net short forward position: $59.4 billion (end-September); data comes with a one-month lag.
- Book includes NDF and onshore forwards; it peaked in February 2025.
- Rupee near ₹88.76 in early November.
- Purpose: curb volatility and speculation; per Gaura Sen Gupta (IDFC First Bank), defends rupee without tightening liquidity too sharply.
Exam angle
- Pressures: gold import outflows, FPI exits, US tariff worries.
- Instrument: FX forwards and futures.