Rupee opens at 93.59/$ vs previous close of 94.81/$ amid RBI curbs on net open positions

The Indian rupee opened at 93.59/$ on Monday as traders started unwinding their net open positions after the Reserve Bank of India's latest direction on curbing these positions to $100 million. It had closed at a record low of 94.81/$ on Monday.

The RBI's curbs on onshore position limits are expected to lead to dollar selling by banks in the domestic foreign exchange market amid unwinding of existing arbitrage positions. These positions are estimated to be at a total of around $40 million for all banks.

“The rupee was trading at around 93.40/$ levels in the offshore market just before domestic markets opened. But banks are quoting slightly higher numbers so they can minimise as many losses as possible. However, as the rupee strengthens, I expect importers to come in and buy dollars to hedge their positions. Oil companies may buy too because oil is still at $115 per barrel,” said a trader from a state run bank.


Traders said that banks are likely to incur significant losses since they unwind positions at much wider spreads than where they were initiated.

Brent crude oil futures rose 3% on Monday to nearly $116 per barrel as investors brace for a protracted conflict in West Asia, according to Reuters.

The pressure on the rupee has been intense amid persistent portfolio outflows and mounting concerns over the impact of higher oil prices on India's economic outlook. The rupee had dropped 3.5% in March itself and had declined over 10% over this fiscal year.