समाचार Samāchār · Business · 5 November 2026

Sebi sets one $5 million limit on rupee derivatives. Above it, show real exposure

A Sebi circular on Thursday replaces contract-by-contract limits with a single cap across all rupee pairs and exchanges. It follows the RBI’s cut from $100 million in October.

The exchange-traded rupee market now has one number. In a circular on Thursday Sebi said domestic clients and foreign portfolio investors may hold rupee derivatives without establishing underlying exposure only up to $5 million of notional value. The limit covers all currency pairs involving the rupee, put together, across all recognised exchanges. It applies to positions outstanding at any point.

Above the limit the rules split. Foreign portfolio investors with long positions need underlying exposure in Indian debt or equity, including mutual fund units. IANS and CNBC-TV18 report that their short positions cannot cross $5 million without underlying exposure. Domestic investors may go higher on the conditions in the RBI’s Master Direction on Risk Management and Inter-Bank Dealings.

This finishes what the RBI began. On 10 October the central bank cut the threshold from $100 million to $5 million. It barred the rebooking of cancelled rupee derivatives. It put a 20% reserve on certain contracts above $2 million. It also opened a dollar window for Indian Oil, Bharat Petroleum and Hindustan Petroleum. The rupee had closed at ₹96.73 a dollar on 9 October, close to its May low of ₹96.96.

One limit is simpler to follow than several. IANS reports that the circular replaces the earlier contract-specific approach and supersedes the thresholds in Sebi’s December 2024 master circular. The other provisions stay. Exchanges must change their systems, inform brokers and clearing members and report back to Sebi. The reports do not give an effective date.

A tighter cap is a defence, and it should be judged as one. It narrows a lane for positions without proof. It does not earn a single dollar. That work sits with exporters, and with a trade book spread across more markets.

What a founder takes from it: A firm with real foreign currency exposure should treat the proof as part of the hedge and keep it ready. The lasting defence for the rupee is earning more dollars through exports.