India’s central bank, the Reserve Bank of India (RBI), has changed how it handles the rupee’s ups and downs. Since late 2024, when Governor Sanjay Malhotra took charge, the RBI has stepped back and let the rupee move more freely.
Why does this matter? Well, before this change, the rupee’s swing in value was small each day. But now, that swing is almost three times bigger, and measures of how much the rupee moves are twice as high . This makes companies worry because even a small movement can affect imports and exports a lot.
So what are businesses doing? Many are turning to hedging tools—like simple forward contracts—to protect themselves. For example, Hari Krishna Exports now hedges 90% of its foreign exposure. Before, most firms hedged about 60–70%.
More businesses are doing this, especially smaller ones, because they don’t want to be hit by sudden rupee moves.
What this means for you as a forex learner:
- Know the RBI’s new policy. It’s not fixing the rupee value anymore but letting it float more.
- Learn about hedging basics. Understand forward contracts, limit orders, and simple options.
- Watch volatility. The rupee now moves between ₹83.77 and ₹87.95 against the dollar. These swings are bigger than before.
- Think strategy. Traders and businesses are actively using hedging to manage risk. You can too—just keep it simple.
Summary & Takeaway
The RBI’s decision to let the rupee vary more means volatility is higher, and firms are using hedging tools to deal with it. For you, this is a great chance to learn, practice, and apply simple hedging strategies in your forex trading.