RBI has issued a circular prohibiting Authorised Dealers from allowing clients to rebook cancelled foreign exchange derivative contracts involving INR. The move aims to prevent speculative positioning and ensure orderly forex markets.
RBI Imposes Ban on Rebooking Cancelled Forex Derivatives
The Reserve Bank of India has introduced strict restrictions on the rebooking of cancelled foreign exchange derivative contracts involving the Indian Rupee. Issued through A.P. (DIR Series) Circulars No. 25 and 26 on October 12, 2026, the directive prohibits Authorised Dealers (ADs) from permitting users to rebook any such cancelled contracts, including those related to trade or investment hedges.
The circular clarifies that once a foreign exchange derivative is cancelled, the underlying exposure must be genuinely re-established before a new contract can be booked. This aims to curb round-tripping and speculative exploitation of exchange rate fluctuations under the guise of hedging. The RBI noted that the measure responds to observed market behaviour that could undermine currency stability.
Corporate legal teams and ADs must revise internal compliance protocols to enforce documentary validation of fresh exposures. The rule has immediate implications for cross-border transactions, treasury operations, and hedging strategies, particularly for importers, exporters, and foreign investors with INR-linked derivatives.