RBI’s net short dollar position reaches $239.2 billion in September
Key Facts
The Reserve Bank of India’s net short dollar position in the forward market reached a record $239.2 billion at the end of September 2026, compared with $200.06 billion at the end of August, according to a Business Standard report published on November 1. The figure reflects substantial forward dollar commitments at a time when the rupee remained under pressure, while the report said the large position limits the bank’s ability to curb elevated forward premiums. The one-month increase in the position signals a widening of the bank’s forward exposure, not a single amount due in the near term. The report did not say that the entire position would be settled within a year or that it had a single maturity date. This comes alongside a recent improvement in the rupee and measures taken by the bank in the foreign-exchange market.
The report attributed the increase in short positions in recent months to a special preferential swap window that allowed banks to mobilize foreign-currency non-resident deposits under the FCNR (B) category. The window was activated on June 8, 2026, and then closed on August 31, with banks allowed to enter into swaps under it until September 11. The report said banks raised $133 billion in these deposits through the window. The initiative aimed to strengthen the balance of payments and encourage capital inflows amid pressure on the rupee linked to higher crude oil prices after the outbreak of the West Asia conflict in late February. This context links the buildup of forward commitments to a mechanism for attracting dollar funding, rather than distributing the position’s maturities across periods cited in unverified estimates.
Available maturity data show an expansion in positions extending beyond one year, which rose to $199 billion at the end of September from $176.6 billion at the end of August. In a separate category, net short positions with maturities of three months to one year stood at $13.22 billion at the end of September. These figures do not represent a complete breakdown of the record position, but show that a large portion of recorded positions extends beyond one year. They also distinguish between long-dated maturities and medium-term positions, without providing a detailed allocation for other categories. The length of these positions means their impact is tied to a varied maturity schedule, rather than a single immediate maturity.
In the forward market, the 12-month dollar-rupee premium rose by more than 120 basis points during October 2026. The premium reached 4.57% on the Friday before the November 1 report, up from 3.36% at the end of September. Economist Madhavi Arora said the large short position limits the bank’s ability to curb sharply elevated forward premiums. She added that "the Reserve Bank of India’s recent measures in the foreign-exchange market and tighter market access calmed the spot market." The report thus paired calmer spot trading with a higher cost of forward contracts, while noting that the size of the position constrains the bank’s ability to influence their premiums.
The report said the rupee had rebounded by about 2% from a recent low of 96.85 rupees per dollar, and attributed stability in the spot market to foreign-exchange measures and tighter access to it. In EL7’s daily closing data, the dollar rate fell from 94.89 rupees on November 2 to 93.785 rupees on November 8, 2026. The two movements reflect different periods: the rupee’s rebound from its recent low, as reported on November 1, followed by the decline in the dollar rate between the closing prices recorded the following week. The report did not say that the improvement in the spot rate had removed the effect of the forward position or its premiums. The 12-month premium at the end of October remained above its level at the end of September.
Investors are awaiting the release of India’s October consumer price index on November 12, 2026, according to the Ministry of Statistics’ calendar. The ministry’s official website sets the index’s usual release date as the 12th of each month, or the next working day if that date falls on a holiday. The Reserve Bank of India’s next Monetary Policy Committee meeting is scheduled for December 2–4, 2026. The bank raised the repo rate by 25 basis points to 5.50% in its October decision and shifted its stance to gradual tightening. These upcoming milestones put inflation data and the monetary policy decision at the center of the domestic outlook after the forward position hit a record in September.