Indian banks reported heavy losses in foreign exchange trading after the Reserve Bank of India introduced strict limits on rupee positions in March 2026. The central bank directed authorised dealer banks to restrict their end of day onshore rupee net open positions to 100 million dollars. The order had to be implemented by April 10 and gave lenders little time to adjust.
The sudden rule came during a period of rupee volatility, foreign investor withdrawals and strong corporate demand for hedging. According to Crisil Coalition Greenwich, the short window forced banks to unwind trades quickly and led to losses of nearly 500 million dollars.
Banks later recovered about 400 million dollars, equal to 80 percent of the losses, as spreads widened and positions stabilised. Dealers began pricing in tighter balance sheet capacity and higher execution risks which helped offset earlier setbacks.
On April 20 the RBI eased some restrictions by allowing limited related party transactions. This reduced operational stress but banks still had less room to warehouse risk and provide liquidity.
India’s dependence on energy imports adds further pressure on currency markets. The country imports 85% of crude oil and 50% of natural gas. Between January and July 2026 the import bill rose 20% to 95.9 billion dollars, the highest since 2011.
The future of the rupee will depend on RBI policy, capital flows, global investor sentiment and India’s ability to manage its energy needs.
