After India’s central bank introduced recent foreign exchange curbs, pricing between exchange-traded rupee futures and onshore forwards has diverged enough to create arbitrage opportunities. However, bankers are reportedly holding back because the same regulatory uncertainty raises risk and could make these trades costly or difficult to execute.
The Indian rupee ended Monday nearly unchanged, stuck in a tug-of-war between dollar inflows and outflows. Dollar sales gained momentum as traders unwound arbitrage positions, while importers sought protection through hedging. Adding pressure to market sentiment, escalating risks tied to the Iran war kept traders cautious and limited large swings in the currency.
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