Earlier, Authorised Dealers were governed by the Master Direction Risk Management and Inter-Bank Dealings dated July 05, 2016, which empowered the Reserve Bank of India to prescribe limits on Net Open Position in INR (NOP-INR) based on prevailing market conditions, but did not prescribe a specific uniform cap applicable at all times. This flexibility, while useful, could lead to variability in exposure levels and potential volatility in the foreign exchange market, necessitating a more calibrated and immediate control mechanism in light of evolving market dynamics. Accordingly, the Reserve Bank of India has now mandated that Authorised Dealers shall maintain their NOP-INR positions in the onshore deliverable market within a limit of USD 100 million at the end of each business day, with compliance required at the earliest and mandatorily by April 10, 2026, thereby strengthening exchange rate management and curbing excessive speculative positions.
Link – https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13344&Mode=0
About the Author
