The Reserve Bank of India on Monday rolled back some restrictions on rupee derivative trades that were put in place earlier this month to arrest the currency's slide to record lows. The FX structural changes began with RBI targeting arbitrage trades by capping banks' net open rupee positions to $100 mln on March 27. However, the measure failed to offer relief to the currency as banks exited the positions by offering them to corporates and related parties and INR breached record low of 95.22/$. Post that on April 1, the central bank had prohibited banks from offering non-deliverable forwards to clients and restricted companies from rebooking forward contracts, as part of measures to curb arbitrage trades that were adding to rupee volatility. It also barred banks from entering INR-linked FX derivative contracts with related parties.
