Exchange-traded currency derivatives in India flourished for over a decade, attracting retail investors and proprietary traders. However, the Reserve Bank of India’s rule reaffirmation, permitting the use of forex derivatives solely for hedging, has caused significant disruption in the market. Traders who previously engaged in speculative trades without holding underlying assets are now excluded. The conflicting interpretations of regulations in India have raised concerns about the nation’s investment image and may have unintended consequences such as reduced trading volumes and increased reliance on costlier over-the-counter markets.