By Jaspreet Kalra<\/p>\n
MUMBAI, March 30 (Reuters) – The Indian rupee bounced back sharply on Monday from a record low against the dollar, after the central bank tightened limits \u200con banks’ forex positions, sparking onshore dollar selling as traders rushed to cut arbitrage positions.<\/p>\n
The \u200crupee rose nearly 1% to 93.85 per dollar in early trading, recovering from 94.84 hit on Friday.<\/p>\n
The Reserve Bank \u200bof India late Friday directed banks to cap their net open rupee positions in the foreign exchange market at $100 million by the end of each business day, with compliance required by April 10.<\/p>\n
The move is expected to spark a wave of unwinding in arbitrage positions. These are trades in which banks \u200cseek to profit from the gap \u2060between the non-deliverable and onshore forwards market, bankers said.<\/p>\n
That unwinding will likely push banks to sell a significant amount of dollars in the local market, \u2060traders said, early signs of which were already visible as the rupee strengthened across both the onshore spot and forward markets.<\/p>\n
The 1-month USD\/INR outright forward was last at 94.13, down from near 95.15 on Friday.<\/p>\n
The \u200bstringent \u200bcurbs limit both the size of speculative wagers and \u200barbitrage positions in a period when market \u200cturmoil has seen the rupee depreciate over 4% so far in March, as the energy shock from the war in the Middle East raises growth and inflation risks for Asia\u2019s third-largest economy.<\/p>\n
Bankers have urged the RBI to grant them three months to comply with the directive as they fear a disorderly unwinding could leave them exposed to sharp losses.<\/p>\n
“Some people are still waiting on potential \u200crelaxation by the RBI and if those positions are \u200balso cut, USD\/INR could take another leg lower,” a \u200btrader at a state-run bank said.<\/p>\n
The RBI’s \u200bcurbs come at a time when the central bank has also been actively \u200cintervening in FX markets to shield the \u200blocal currency from global \u200bmarket volatility triggered by the war in the Middle East.<\/p>\n
On the day, India’s equity benchmark index the Nifty 50 slipped 0.5% while the yield on the benchmark 10-year bond ticked \u200bup 1 bp to 6.74%.<\/p>\n
Brent \u200ccrude rose 2% to $115.25 a barrel, bringing its gains for the month to near \u200b60%, topping the jump that followed Iraq’s invasion of Kuwait in 1990.<\/p>\n
(Reporting by Jaspreet \u200bKalra; Editing by Mrigank Dhaniwala and Ronojoy Mazumdar)<\/p>\n","protected":false},"excerpt":{"rendered":"By Jaspreet Kalra MUMBAI, March 30 (Reuters) – The Indian rupee bounced back sharply on Monday from a…\n","protected":false},"author":2,"featured_media":365381,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[114,85,7529,46],"class_list":{"0":"post-365380","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-business","9":"tag-il","10":"tag-indian-rupee","11":"tag-israel"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/365380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=365380"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/365380\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/365381"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=365380"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=365380"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=365380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}