The Reserve Bank of India is reviewing the approaches major banks took to close their Rupee arbitrage positions, according to six sources. This scrutiny arises from worries that these transactions might have violated rules and hindered attempts to support the currency.
During late March and early April, the RBI compelled banks to liquidate as much as $40 billion in Rupee arbitrage deals involving the domestic spot market and non-deliverable forwards. This action aimed to bolster the currency, which had reached all-time lows amid the Iran conflict and withdrawals by foreign investors.
