New strategy: RBI likely going slow in forward market intervention

After creating a short position of almost $50 billion in the forward market till the end of October 2024, the Reserve Bank of India (RBI) seems to have fine-tuned its intervention strategy by going slow in selling dollars in those markets.

- ANJALI KUMARI

By the end of October, the net short position of the RBI in the forward market was $49.2 billion, up from $14.6 billion at the end of September. According to market estimates, while the short position in the forward book has further swelled to about $60 billion by the end of November, the extent sales slowed down.

The forward position is a combination of both on-shore and non-deliverable forwards.

If the RBI has a short position in the forward market, it means the central bank has to buy dollars in the future to square off the position. This, in turn, would put further pressure on the domestic currency.

Data shows that the central bank has been having a short position in the forward market since March 2024.