The Reserve Bank of India will limit banks’ net open rupee positions to $100 million per day starting April 10, marking its first major policy shift in over a decade. This rule mandates lenders, including JPMorgan Chase, to reduce cumulative offshore and onshore exposures that have contributed to over $30 billion in one-sided bets.

The announcement triggered a sharp intraday rally in the rupee, which gained 1.4% to 93.4762 per dollar, its largest move since February. Global investors simultaneously withdrew roughly $12 billion from Indian equities and $1.6 billion from local bonds in March, pressuring currency and bond markets.

Major international banks that dominate non-deliverable forward trading, such as JPMorgan Chase, Standard Chartered, and Citigroup, face potential trading losses and reduced liquidity as they overhaul risk systems to comply. Banks warn that rapid position cuts could exacerbate volatility and incur significant mark-to-market losses.

The RBI has already sold $51.7 billion in foreign currency over the past year, draining reserves by more than $30 billion in March alone. By targeting speculative derivatives positions directly, regulators aim to stabilize the rupee without further depleting reserves, though long-term currency fundamentals remain under pressure.