New Delhi, March 31 -- Banks in India got a jolt late on Friday after the Reserve Bank of India (RBI) capped their net open positions in the forex market at $100 million. Many have been sitting on large long-dollar positions, which they'll now be forced to unwind by RBI's deadline at a loss. Bank stocks, of course, slid on Monday.

RBI's apparent aim is to increase dollar supplies in support of the rupee. But the fact that it last used this measure in 2011 testifies to the exceptional nature of its action. To be sure, RBI has been selling dollars as its first response to the rupee's slide. But a rapid drawdown of its reserves may have made it seek other options.

One reason for the rupee's fall has been a surge in speculative bets in offs...