RBI moves to support rupee at 96.78, cracks down on forex derivatives
The central bank also lowered hedging thresholds and will meet the daily dollar needs of three state-run oil firms, citing pressure on reserves.
- On Saturday, The Reserve Bank announced measures to ease pressure on the rupee, tightening rules for Forex derivatives, restricting the rebooking of cancelled contracts, and introducing a cash reserve requirement for large trades.
- The intervention comes as the Indian rupee hovers at 96.78 against the dollar, trading close to its record lifetime low, while foreign exchange reserves fell by $12.95 billion in the week ended October 2.
- Authorised dealers must maintain a 20 per cent cash reserve with the RBI for derivative contracts exceeding $2 million, while the central bank slashed the threshold for executing Forex derivatives without underlying exposure from $100 million to $5 million.
- Separately, the RBI will meet the entire daily Forex requirement of Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation starting October 12, removing the three state-run oil PSUs' dollar demand from the market.
- These measures aim to strengthen market discipline and curb excessive speculative activity as crude oil prices sizzle above the $100 per barrel mark, though analysts warn they may temporarily elevate hedging costs for businesses.
19 Articles
19 Articles
The Central Bank of India imposed new restrictions to reduce demand for dollars and support for rupees, including providing currency to government oil companies from reserves and tightening hedge rules, amid currency decline of more than 7% since the beginning of the year.
RBI cracks down on rupee speculation as currency falls close to 97 against dollar
Curbs on rebooking cancelled forex derivative contracts, cut in the threshold for transactions without underlying exposure, documentation requirements tightened, new Foreign Exchange Risk Reserve (FERR) formed.
The Reserve Bank of India has announced several measures to support the rupee, including allowing oil companies to sell dollars through a special window and tightening rules for foreign exchange derivatives.
RBI tightens forex derivative rules, cuts exposure threshold to $5 million from $100 million
The central bank has barred rebooking of cancelled rupee-linked derivative contracts and introduced a 20 percent cash reserve requirement for large transactions to strengthen market discipline
The Economic Times
RBI moves to support rupee at 96.78, cracks down on forex derivatives
The Reserve Bank of India introduced new measures to address the pressure on the rupee. These measures include tightening foreign exchange derivative rules and limiting rebooking of cancelled contracts. Furthermore, a 20% cash reserve requirement has been established for large forex derivatives transactions. The central bank aims to enhance market discipline and promote effective risk management strategies.
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