India Central Bank FX Forward Book Tops $100 Billion as Rupee Hammered
India's central bank has dramatically expanded its foreign exchange forward book to more than $100 billion as it attempts to defend the Indian rupee against sustained pressure driven by the ongoing Iran war and its cascading effects on regional trade and energy costs.
The Reserve Bank of India's ballooning forward position reflects the scale of intervention required to stabilise the currency as energy import bills surge and investor risk appetite for emerging market assets deteriorates sharply.
India is among the most exposed major economies to the Iran conflict given its heavy dependence on Gulf oil, its significant diaspora remittance flows through the region, and its trade exposure to affected sea lanes including the Strait of Hormuz.
Economists warn that sustaining an intervention book of this magnitude carries its own risks, including a compression of India's net forex reserve position when forward obligations are netted out. The situation is being monitored closely by sovereign credit analysts and the IMF.
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