New Delhi, March 30 (NationPress) The Indian rupee has commenced trading with a gain of 1.3 percent, reaching ₹93.59 against the US dollar on Monday, following the Reserve Bank of India’s (RBI) recent measures to impose restrictions on onshore position limits.

The RBI has mandated that banks restrict their net open positions in rupees in the foreign exchange market to $100 million to mitigate speculative trading and stabilize the depreciation of the Indian rupee.

As per the directives, banks serving as authorized dealers must ensure that their end-of-day open positions in the onshore rupee do not exceed $100 million. The central bank has given banks until April 10 to comply with this daily cap, indicating that different limits could be set based on evolving market scenarios.

Current estimates suggest that the overall magnitude of these positions could range between $25 billion and over $50 billion.

In March, the rupee experienced a decline of over 4 percent amid rising geopolitical tensions. Just last Friday, the currency dropped nearly 1 percent to ₹94.8125, hitting a low of ₹94.8400.

Analysts indicate that ongoing concerns regarding high crude oil prices are adversely impacting the rupee's value and the broader economic outlook.

"With the conflict in West Asia entering its fifth week, there are indications of escalation, including the Houthis' involvement and the US deploying additional troops. Brent crude has surged to approximately $116 per barrel," analysts noted.

The previous favorable macroeconomic environment for India, characterized by high growth, low inflation, and stable deficits, has weakened due to the ongoing conflict.

"Currently, we are faced with the likelihood of decreased GDP growth, increased inflation, wider fiscal and current account deficits, and slower earnings growth for FY27," they added.

Analysts suggest that the market has largely absorbed these risks, as evidenced by the drop in the Nifty’s trailing price-to-earnings (PE) ratio to around 19.9 times, which they consider fair but not particularly cheap. However, certain sectors, especially financials, remain appealingly valued.

Furthermore, the RBI's decision to limit net open positions is expected to provide support for the rupee in the short term.

"The unwinding of substantial dollar positions could bolster the rupee's value shortly," they remarked.

Persistent demand for dollars and inflationary pressures from energy costs are keeping the rupee under strain, with the outlook remaining weak unless there is a significant correction in crude prices.

Meanwhile, Brent crude futures have surged by as much as 3.66 percent to an intraday peak of $116.70 per barrel and are trading close to their 52-week high, while US WTI futures are at $103.38, reflecting a rise of 3.75 percent from the previous session.