India's central bank tightened rules on offshore foreign exchange derivative contracts, specifically non-deliverable forwards (NDFs), to curb speculative betting against the weakening rupee. The Reserve Bank of India (RBI) restricted lenders from offering certain NDFs, aiming to reduce offshore rupee volatility. This follows recent measures limiting local currency transactions.

The move signals heightened concern over the rupee's depreciation, which has hurt corporate import costs and foreign exchange reserves. Non-Deliverable Forwards are off-balance-sheet instruments allowing offshore speculation on rupee movements without physical currency exchange. By restricting their availability, the RBI seeks to dampen speculative pressure on the local currency. Market analysts expect this could stabilize the rupee in the short term but may increase costs for companies hedging currency risks.