India FX curbs spark confusion over rupee derivatives
New foreign exchange curbs in India have created confusion among bankers regarding cash-margin requirements for rupee derivatives. Several institutions are withholding forward quotes while awaiting clarification from the central bank on interbank rules.
Insights:
India's latest foreign-exchange curbs have sparked uncertainty among bankers, with seven institutions holding back on quoting dollar/rupee forwards. The confusion stems from a broad interpretation of a new cash-margin requirement on rupee derivative transactions. The standoff risks liquidity in the currency market as institutions await formal clarification from the central bank.
