Rupee weakens in NDF, set to slip past 93 as oil surges; RBI steps up key tool

The rupee fell 49 paise to hit a record low of 92.89 against the US dollar in early trade on Thursday, amid sustained pressure from a strong dollar and global market volatility.As the currency weakened, the Reserve Bank of India has significantly increased its market intervention using forward contracts, Bloomberg reported citing people familiar with the matter. The central bank’s net-short dollar position, a gauge of its forward dollar sales, is nearing $100 billion across offshore and onshore markets.The figure has risen sharply from $67.8 billion in January, according to official data, and was last at a record $88.8 billion in February 2025, according to Bloomberg.The stepped-up intervention comes as emerging market currencies face renewed pressure from a strengthening US dollar. Even before the ongoing geopolitical tensions, the RBI had been actively intervening in forex markets to stabilise the rupee amid heavy equity outflows triggered by higher US tariffs.“Letting the rupee freely absorb shocks is not an option in times of stress, when speculative dominance in FX markets can quickly put the currency on a slippery slope, one that we can ill-afford,” said Madhavi Arora, chief economist at Emkay Global Financial Services Ltd told Bloomberg. The RBI has focused much of its intervention in offshore markets, particularly through non-deliverable forwards (NDFs), which allow it to influence the exchange rate without immediately drawing down foreign exchange reserves. The central bank has also used short-term dollar contracts and supplemented them with buy-sell swaps in the domestic market to manage liquidity.India’s foreign exchange reserves stood at $717 billion in the week ended March 6, close to record highs.However, analysts caution that the growing derivatives position could pose challenges. As these contracts mature, they may generate recurring demand for dollars, potentially limiting any sustained recovery in the rupee, strategists at Barclays Plc noted.The rupee has hit successive record lows in March, breaching the key 92-per-dollar level, reflecting continued pressure on the currency despite central bank efforts.