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2026-04-01 13:26:41
[High Oil Prices Pressure Indian Rupee, Market Bets on Exchange Rate Breaking 100] 1. The Reserve Bank of India (RBI) abruptly ordered a crackdown on rupee put options on Friday evening, triggering emergency liquidations in the banking sector. Up to $30 billion in arbitrage trading faced forced liquidation pressure. After trading resumed on Monday, the market panicked over a liquidity crunch. Sources estimated that banks liquidated between $4 billion and $10 billion in positions that day, with the vast majority still pending before the April 10 deadline. 2. Because the Indian foreign exchange market was closed for holidays on Tuesday and Wednesday, Monday's liquidation wave caused the USD/RUB exchange rate to rise to a record high of 95.22, the largest intraday fluctuation since 2013. This intervention by the central bank is one of the strongest in a decade to curb currency speculation. 3. Despite Trump's signals of a possible withdrawal from Iran, the high oil prices resulting from the Iran war continue to push up India's trade deficit and inflation. Analysts from institutions such as Wells Fargo warned that a rupee falling to 100 USD is almost a certainty. Currently, due to banks being forced to buy US dollars domestically to cover their short positions overseas, the onshore-offshore forward spread has surged to its highest level since 2020.
