India’s RBI Tightens FX Derivatives Rules, Cuts Hedging Threshold to $5M

The dramatic drop in the no-underlying hedging threshold, from $100 million to $5 million, pulls a far wider set of corporate and trading desks into proof-of-exposure territory, while the ban on re-entering canceled INR-linked contracts closes a familiar route for rolling speculative positions. The 20% risk retention requirement adds a capital cost that could thin liquidity in smaller INR derivative trades. Whether volumes migrate to offshore non-deliverable forwards, or onshore activity simply contracts, is the open question worth watching.