“Why even an NDF Dog cannot wag the on-shore tail, much less an NDF tail wagging the on- shore Dog !” - V.K.Sharma

...Arbitrage between two discrepant prices of an asset in two different markets requires taking simultaneous long and short positions to benefit from, and eventually align, the discrepant prices. Tautologically, this arbitrage is risk free in that loss on one position is offset by a matching gain on the other. But restrictions on who, and how one, can take positions in the on-shore and NDF USD-INR market come in the way of agents engaging in risk-free arbitrage for NDF market to influence exchange rate in the on-shore market. More specifically,..........

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