On Monday, the Reserve Bank of India (RBI) announced a relaxation of certain forex regulations for banks, allowing related-party hedging transactions under a $100 million net open position (NOP) cap. The revised rules clarify that these transactions will not be deemed speculative, thus enabling banks to continue back-to-back hedging operations without the need for premature unwinding of existing positions. This decision comes after a series of tightening measures aimed at curbing excessive speculation in the currency market, where the Indian rupee had previously fallen 11% against the US dollar in FY26. Anindya Banerjee, head of research at Kotak Securities, noted that the RBI's clarification helps distinguish genuine risk-offsetting trades from speculative activities, providing much-needed operational relief to banks. The NOP limit, which defines the maximum unhedged foreign exchange exposure a bank can carry, remains unchanged, ensuring market stability while allowing banks to manage their risk more effectively.