Over the past two years, India’s central bank built one of the world’s largest bearish dollar bets to support a persistently weak rupee. It now faces the challenge of unwinding that position without destabilizing the currency market. With a spate of recent measures expected to attract foreign capital, the Reserve Bank of India has started trimming its massive short dollar forward position, a stock of commitments to sell the greenback at a future date. The book had ballooned to a record $106.7 billion in May, as per Bloomberg calculations based on RBI data. The balancing act lies in the pace and extent of the unwind.