The Reserve Bank of India (RBI), India’s central bank, appears comfortable with current dollar-short positions and is taking a more selective approach to foreign inflows, according to BNY and Commerzbank. Dollar shorts are positions that profit when the US dollar weakens against the rupee. The assessments indicate that the RBI is prioritizing the smoothing of excessive volatility over maintaining a fixed exchange-rate level, allowing the rupee to find market equilibrium while retaining the ability to intervene if movements become disorderly. The approach comes as India attracts robust foreign portfolio investment and global interest-rate expectations evolve. It could give the market greater freedom to determine USD/INR levels, although short-term fluctuations may persist. The rupee remains influenced by Federal Reserve policy, crude oil prices, portfolio flows, trade conditions and India’s foreign-exchange reserves.