RBI Clarifies Foreign Exchange Hedging Rules
The Reserve Bank of India clarified its new foreign exchange rules to calm markets. The guidance details which derivative contracts require reserves and which are exempt.
India's central bank issued new guidelines on foreign exchange derivatives during Thursday afternoon trading, clarifying margin rules that had unsettled local financial markets. The intervention followed a spike in forward premiums after tighter cash-margin requirements forced lenders to pause trading quotes. The clarifications aim to stabilize currency hedging costs and clarify compliance parameters for authorized dealer banks.
