India banned its banks from offering the most popular instrument for trading the rupee offshore, threatening to squeeze a $149 billion-a-day market as it seeks to shore up a tumbling currency. The move will likely tighten offshore rupee liquidity (notably NDF activity), raise FX volatility and curtail hedging capacity for corporates and foreign investors. Expect risk-off flows in EM FX, potential dislocations in global FX liquidity and knock-on pressure on EM asset prices.
India banned its banks from offering the most popular instrument for trading the rupee offshore, threatening to squeeze a $149 billion-a-day market as it seeks to shore up a tumbling currency. The move will likely tighten offshore rupee liquidity (notably NDF activity), raise FX volatility and curtail hedging capacity for corporates and foreign investors. Expect risk-off flows in EM FX, potential dislocations in global FX liquidity and knock-on pressure on EM asset prices.
AI-powered research, real-time alerts, and portfolio analytics for institutional investors.
Request a DemoOverall Sentiment
strongly negative
Sentiment Score
-0.70
