RBI curbs jolt rupee forwards as banks retreat from usual dollar bets

The rate gap ballooned then vanished fast as traders waited

New RBI limits on banks’ net open rupee positions sparked sharp swings in dollar rupee forwards. The domestic and overseas rate gap widened early as banks expected to sell dollars locally, then narrowed quickly when banks shifted to a wait and watch stance. With expectations of possible RBI relief, the difference settled close to the near-Friday closing level.