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Rupee strengthens by 1.4% against US dollarRupee jumps to 93.59 per dollar as RBI caps bank net open rupee positions at 100 million dollars, forcing unwinding of NDF arbitrage amid Iran conflict volatility.By Anshul  March 30, 2026, 9:19:31 AM IST (Updated)2 Min ReadThe Indian rupee opened sharply stronger on Monday (March 30), gaining 1.22 paise to trade at 93.59 per dollar compared with Friday’s (March 27's) close of 94.81, as banks began unwinding arbitrage positions in line with the Reserve Bank of India’s latest directive.

Overall, the rupee is up about 1.4% against the US dollar in early trading.

Late on Friday (March 27), the RBI instructed banks to cap their net open rupee positions in the onshore market at $100 million by the end of each business day, with compliance required by April 10.

Arbitrage trades, which involved buying dollars onshore and selling them in the offshore non-deliverable forward (NDF) market, had been built to exploit widening spreads between the two segments. That spread has expanded sharply:

The one-month forward rate difference between offshore and onshore markets widened to 65 paise, from just 2–3 paise on Friday (March 27).

The six-month forward rate gap jumped to 1.35 ₹, compared with 17 paise on Friday.

These adjustments reflect heightened volatility, risk aversion, and oil-linked pressures stemming from the Iran conflict. Market estimates put the size of such positions between $25 billion and $50 billion.

The rupee has faced intense downward pressure in March, dropping more than 4% through Friday—its worst monthly performance in over seven years. Friday alone saw the currency fall nearly 1% to 94.81, hitting an all-time low of 94.84.

The central bank has been active in both onshore and NDF markets to support the rupee and slow its decline.

“Any initial dip in dollar/rupee should see importer bids come in quickly, while banks keep cutting positions. Hard to call where this settles," said a currency trader at a private sector bank.

Traders also noted that banks could incur significant losses as they unwind positions at much wider spreads than those at which they were initiated.

-With Reuters inputsContinue ReadingFirst Published: Mar 30, 2026 9:08 AM ISTTagsDollarRBIrupeerupee vs dollar