The Indian central bank has lifted the informal restrictions on rupee non-deliverable forward trades it had placed on local banks in October, four bankers told Reuters.
All banks are now back to building positions in this segment, said one of the bankers with a private sector lender.
The bankers declined to be named as they are not authorized to speak to media.
The RBI, now, does not think that banks exploiting any mis-pricing between the two markets pose a threat to the rupee, another trader at a private sector bank said.
The dollar's decline and the relatively stable outlook has helped RBI, the trader said.
The dollar index is hovering around 105, down 8.5% from year-to-date highs.
The 2-year Treasury yield is down 52 basis points from its peak. The Fed is expected to deliver a smaller 50 basis points rate increase this week after four back-to-back hikes by three-quarters of a percentage point.