Indian regulators are in discussions to reassess stringent regulations governing exchange-traded currency derivatives, following appeals from exchanges and traders, three sources with direct knowledge of the matter said, in a potential effort to revive a market increasingly shifting offshore.
The Reserve Bank of India in 2024 reiterated a rule that currency derivative positions on exchanges should be backed by underlying exposures. While the rule had existed before then, it had not been strictly enforced, leading to a surge in speculative trading.
After the advisory, trading in the contracts — used to hedge against foreign exchange risks and speculate on currency movements — nosedived in India and rose overseas.
The average daily turnover in currency futures dropped to $766.84 million in October 2025 from $3.7 billion in March 2024 on the National Stock Exchange of India. In contrast, turnover for dollar/rupee futures – the most actively traded – rose to $3.2 billion from $1.8 billion in March 2024 at Singapore’s SGX.
