The Reserve Bank of India (RBI) is taking decisive steps to curb the volatility of the Indian rupee, which has depreciated nearly 10% against the US dollar in the fiscal year 2026. The central bank has implemented new regulations that limit banks' net open foreign-exchange positions to $100 million, effective April 10. This move follows a significant drop in the rupee, which fell to a low of 95.22/$ on March 31, prompting the RBI to sell an estimated $15-20 billion to prevent further decline. Despite these efforts, the rupee continued to weaken, leading the RBI to prohibit banks from offering rupee non-deliverable forward (NDF) contracts to clients. These restrictions aim to stabilize the currency by reversing previous arbitrage strategies that had contributed to its volatility. Following the announcement, the rupee showed signs of recovery, closing at 93.06/$ on April 2, approximately 2.2% stronger than its previous close. However, analysts warn that if offshore trading detaches from onshore positioning, the RBI may face challenges in maintaining stability, particularly during periods of heightened volatility.