India Forces Banks to Unwind Rupee Bets, Sparking Short Squeeze

India took one of its most forceful steps in over a decade to curb speculative bets against the rupee, triggering a short squeeze.

Late Friday, the Reserve Bank of India announced new rules capping the open positions banks can hold in the onshore currency market at $100 million at the end of each trading day. The change, effective April 10, forces lenders to shrink their books, limiting their ability to run large one-sided bets against the rupee.