It has been more than a month since the America-Israel and Iran war started. The rise in crude oil prices due to the war has shaken the economy of the entire world. It has had a strong impact on America’s economy. India also did not remain untouched by this ongoing turmoil in the world. Ever since the war started, the rupee was falling rapidly against the dollar. The condition of the stock market also remained similar. Meanwhile, a decision of the Reserve Bank of India emerged as a solution to the crisis.
On April 1, 2026, the Reserve Bank of India (RBI) issued a circular. Within a few hours, the rupee witnessed the fastest one-day recovery in many years. Nifty and Sensex also came back up with a surge. While all the Asian markets were trading in the red, the Indian indices wiped out all the day’s losses and closed in the green on Thursday.
Let us know what decision was taken by RBI, which proved to be a solution to the falling rupee against the dollar? We will also know how the future of rupee is going to be in future? Will the reign of the dollar end in the world?
Biggest rise in 12 years
The Reserve Bank of India (RBI) has recently issued a new rule, in which banks have been barred from making non-deliverable derivatives (NDD) contracts linked to the rupee. These contracts were often misused by big players. After this decision, the weak rupee became stronger. The rupee, which had gone below 95 against the dollar, strengthened to 93.10 on April 2. That means there was an increase of about Rs 1.73 in just one day. This increase was the biggest increase in the last 12 years. The last time such a strong surge was seen was in September 2013. The interesting thing is that when many major currencies of the world were under pressure, the rupee moved forward strongly.
What is NDD market?
NDD i.e. Non-Deliverable Derivatives are such contracts in which real rupees are not traded. These are usually traded outside India like Singapore, Hong Kong, London or Dubai. In these contracts, the two parties decide in advance what the rate of the rupee will be in the future, but instead of paying actual rupees, the difference between the two is settled in cash. There are some capital controls in India, so foreign investors cannot trade directly in rupees. For this reason NDD market was formed. But they have been accused for a long time that they influence the real market prices and create price distortions, because the environment abroad can be different from the real economic situation in India.
What will happen next for the rupee?
If we look at the future situation, experts say that these steps of RBI can currently support the rupee. However, if global crude oil prices remain high or selling by foreign investors continues, the rupee may come under pressure again. Some experts believe that the rupee may strengthen to the range of ₹ 90 to ₹ 92, but there is a possibility of it weakening to ₹ 100 if the situation worsens.
At present, RBI has substantial foreign exchange reserves, with the help of which it can manage the situation by intervening in the market if needed. On the other hand, the government is also taking steps to increase exports and reduce imports. If international tension subsides and crude oil becomes cheaper, the rupee may strengthen further.
What will happen if the rupee strengthens?
This is a positive sign for common consumers. If the rupee remains strong, the prices of many imported items including petrol-diesel, mobiles, electronics will remain under control. This may also affect inflation and people may get some relief. However, there is another aspect to this also. A strong rupee can become a challenge for exporters, as it makes their products costlier abroad, which can affect their competitiveness.
Dollar will be challenged
For a long time, crude oil or global trade has been done in US dollars and its economic strength has also been linked to this. But Iran has indicated that toll payments for oil tankers passing through its territory will have to be made not in dollars, but in Yuan, the Chinese currency. This decision has sparked a new debate in the market and its impact was clearly visible on China’s stock market, where a rise was seen. On the other hand, this decision raised a question mark on the future of the dollar. Even before this, many countries have raised their voice against the dominance of dollar and have demanded alternative currency for global trade.
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