RBI authorised dealers to maintain FX risk reserve for FX derivative contracts involving INR to hedge currency risk;

A reserve requirement of this kind functions as a macroprudential brake on the onshore FX derivatives market rather than a capital control in the classic sense: by forcing authorised dealers to fund a cash deposit against the INR leg of their client-facing positions, it raises the carrying cost of intermediating flows where the dealer buys foreign currency against the rupee, and that cost is typically passed through into wider pricing on onshore forwards and swaps. The RBI has form in this area, having moved repeatedly between tightening and easing position, reserve, and margin requirements on dealer books as the rupee cycle has turned, so the direction of travel matters as much as the level: requirements of this kind have historically been built up during episodes of depreciation pressure and unwound when the currency stabilises. The asymmetry is the tell: the measure bites on contracts where dealers are buying foreign currency against INR, which is the side of the book that accumulates when onshore participants are hedging or positioning for rupee weakness, so the reserve is aimed at dampening one-directional demand rather than two-way hedging activity. First-order transmission runs through the onshore-offshore basis: pricier onshore hedging has tended in past episodes to widen the spread between deliverable forwards and the offshore NDF curve and to push some hedging demand offshore where it can. What bears watching next is whether the measure is accompanied by other steps in the standard toolkit, such as changes to intervention posture, liquidity operations to sterilise rupee impact, or communication on the currency, since reserve requirements of this type have rarely been deployed in isolation.