India forced banks to close their short positions in the rupee, causing a significant increase in the rupee against the dollar.

As the cost of defending the rupee continues to rise, India has taken measures to curb speculative bets against the rupee, marking one of the strongest moves in over a decade. Last Friday evening, the Reserve Bank of India announced new rules that set a limit of $100 million on banks' open positions in the domestic and foreign exchange markets at the end of each trading day. This change, which will take effect on April 10th, will force banks to reduce their positions, thereby limiting their ability to aggressively short the rupee. This sense of urgency reflects growing concerns over the rupee, which has hit new lows following the outbreak of the Iran war. This has led the Reserve Bank of India to change its strategy of mainly relying on spot and forward markets for intervention - tools that have led to a decrease of over $30 billion in foreign exchange reserves in the first three weeks of March - and instead take more direct measures targeting financial institutions. Kunal Sodhani, Head of Treasury at New Korea Bank in Mumbai, said, "This move clearly reflects concerns about the weakening rupee, signaling a shift from direct intervention to controlling market positions, which, while providing short-term stability, has limited impact on long-term fundamentals."