Highlights
- RBI’s forward book maturities may pressure rupee, bankers say
- NDF contracts worth at least $7 billion set to mature this week
- Durable inflows could reduce RBI’s forward positions, alleviate rollover pressure, bankers add
Reserve Bank of India’s (RBI) reliance on using the non-deliverable forward market to manage rupee volatility is expected to weigh on the currency, with contracts worth at least $7 billion due to mature this week and more due in the coming weeks, four bankers said.
Selling dollar/rupee forwards in the NDF market lets the Reserve Bank of India support the rupee without an immediate drain on foreign exchange reserves or domestic liquidity. However, when these contracts, typically of one-month to 3-month tenor, mature, counterparties may need to buy dollars in the market.
This puts pressure on the rupee unless the central bank decides to roll them over, bankers said. They did not want to be identified since they were not authorised to speak publicly.
“The pressure on account of forward book maturities could persist for the next couple of months,” said Dhiraj Nim, an economist at ANZ.
“Combined with tepid foreign portfolio flows, alongside some pressure on India’s current account position, it seems to be a recipe for gradual depreciation of the spot rupee.”
Maturities are expected to remain high in March, reflecting the RBI’s forward book and its intervention in recent sessions to keep the rupee from sliding past 91.
Central bank data showed that on December 31, the outstanding forward contracts totalled more than $20 billion in the up-to-one-month tenor, $5.9 billion in one to three months, and $4.3 billion in three months to one year.
Analysts have repeatedly warned that the size of the RBI’s forward book, which includes NDF and onshore forward contracts, will be a source of pressure on the rupee or, during favourable conditions, lead to its underperformance against Asian peers.
The RBI did not immediately respond to a request seeking comment on concerns that NDF interventions could contribute to maturity-related pressures on the rupee.
RECURRING CYCLE
The rupee has remained under broad and persistent pressure for much of the past several months, punctuated only by brief periods of stability. It dropped 5% in 2025 and was among the worst-performing Asian currencies.
The persistent weakness has required the RBI to intervene frequently both via direct dollar sales and forward market intervention.
Due to RBI’s intervention via onshore forwards and NDF, the size of the central bank’s short FX forward book stood at $62.3 billion on December 31.
Each round of forward intervention adds to the outstanding stock of contracts that will mature later, creating a rolling dynamic in which support measures can weigh on the currency again at maturity.
A “durable” revival in inflows would help break this dynamic, a banker said.
“The RBI could use the inflows to reduce outstanding forward positions, lowering the rollover overhang.”
Published on February 23, 2026