NextFin News - On March 11, India’s Reserve Bank of India proposed broader reporting of offshore rupee trades, as authorities in Indonesia, India, Taiwan and China moved over the past two weeks to support their currencies while the dollar strengthened and regional FX markets came under pressure, according to Bloomberg and contemporaneous market reports.
The proposal followed a Feb. 16 draft in which the RBI asked lenders to report more details of derivative trades linked to the rupee that are conducted outside India. Banks would have to report at least 70% of those transactions within a year of the rules taking effect, according to Bloomberg. Global lenders objected in a market averaging more than $149 billion a day, saying the plan could breach client confidentiality, conflict with reporting rules in other jurisdictions, and require major changes to systems, data formats and legal agreements.
The size of the offshore market explains the RBI’s focus. Trading in Singapore, London and Hong Kong is now more than double onshore volumes, according to a 2025 Bank for International Settlements report cited by Bloomberg. Once liquidity shifts abroad, central banks can still influence prices without being able to see the full position book behind them. For the RBI, that means sharp moves outside India can spill back into domestic markets, complicating efforts to manage volatility and making it harder to tell genuine hedging demand from speculative pressure.
India is not relying on reporting rules alone. Governor Sanjay Malhotra said last month the RBI would step in if speculative pressure against the rupee intensifies. Bank Indonesia has pledged “firm and consistent” intervention in onshore and offshore markets to cushion the rupiah. Taiwan’s central bank said it stepped into the market because of large outflows. China has signaled support for its currency by setting a stronger daily fixing during bouts of pressure.
The pattern extends beyond India. The common drivers are a stronger dollar, safe-haven demand and, in some cases, added pressure from higher oil prices and growth worries. When risk assets sold off after the Iran conflict intensified earlier this year, Asian currencies weakened together. Central banks then faced a familiar tradeoff: allow too much depreciation and imported inflation worsens; intervene too aggressively and reserves can be depleted quickly, while markets may test policymakers again after the immediate pressure fades.
Offshore trading makes that tradeoff harder to manage. These markets offer deeper liquidity, broader participation and better price discovery, but they also leave regulators with less visibility into positions. The RBI’s proposed reporting threshold is an attempt to recover some of that missing information as trading spreads across Singapore, London and Hong Kong. The challenge is jurisdiction. A single national regulator is trying to impose one reporting standard on lenders operating under multiple legal regimes.
That is why the lenders’ objections carry weight. They are arguing not just about confidentiality, but about the mechanics of handling cross-border FX flows. If India implements the rule as drafted, some banks may have to choose between broad disclosure and client consent on certain trades, which could limit how complete the RBI’s data set is. A similar dispute surfaced last year when the RBI required banks to disclose offshore interest-rate swap trades. That rule drew the same concerns over jurisdiction and privacy, but the central bank kept its phased timeline in place. The precedent suggests India is prepared to accept friction when it considers the policy objective important.
There is little evidence, though, that markets are simply retreating. Offshore activity has already grown beyond any clean regulatory boundary, and the BIS data cited in the reporting points to a structural shift that is unlikely to reverse quickly. Banks, corporates and investors use the offshore market because it offers liquidity, flexibility and the ability to trade outside domestic business hours. That demand does not disappear because a central bank wants more transparency. Tighter rules may instead push some activity into channels that are even harder to track unless regulators work across jurisdictions.
For investors, the immediate question is whether the latest push changes price behavior in the near term. Probably only at the margin. Central banks can still lean against disorderly moves, and they have shown they will. But intervention does not amount to control, and reporting rules do not remake market structure. Offshore rupee trading is already large enough to shape onshore conditions, while remaining spread across venues that no single authority can fully police.
If the RBI presses ahead with broad offshore reporting, lenders are likely to keep seeking narrower disclosure, longer timetables or explicit client consent. If regional central banks continue intervening in parallel, markets may conclude that authorities are prepared to defend against volatility, not eliminate it. The contest now runs through more than one jurisdiction, more than one market and more than one tool, with Singapore, London and Hong Kong at the center.
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