The Reserve Bank of India (RBI) has taken decisive action to stabilize the Indian rupee by widening the spread between domestic dollar-rupee forwards and overseas non-deliverable forwards (NDF). Following the RBI's prohibition on banks offering NDF contracts to clients, the one-month domestic forward spread increased to approximately 50 paise, while the six-month spread surged to about 180 paise. As a result, the rupee closed at 93.10 against the dollar, marking its largest single-day gain since September 2013. This shift in market dynamics has led banks to sell dollars domestically while purchasing in the overseas NDF market, reversing previous trading behaviors. The RBI's measures are aimed at curbing speculative currency trading, particularly in light of pressures from the West Asia crisis that have driven the rupee to an all-time low against the dollar. By limiting banks' net open positions and banning new NDF contracts for clients, the RBI is making the NDF market less accessible for local banks, effectively transferring control to foreign entities.