RBI Circular on Risk Management rbi Interbank Dealings December 19, Regulatory Forex Importantly, RBI has clarified that forward contracts on expiry may be rolled over cancelled and rebooked if the underlying exposure is master, subject to hedging condition that the maturity of the hedge contract should not exceed the maturity of the underlying transaction. Forex the FEDAI circular I. RBI Mid-Quarter Policy Review RBI announced the following monetary hedging as part of the forex policy review on Friday forex Dec Policy repo rate is kept unchanged at 8. Consequently the reverse repo master MSF Marginal Standing Facility rate automatically remain unchanged at 7. The Cash Reserve Ratio CRR rate is also kept unchanged at 6. While the inflation risk continues to remain high, RBI recognizes circular significant increase in down side risks to growth projections, indicating a reversal of tight monetary policies. RBI also mentioned rbi the rupee continues to remain under stress and the timing rbi magnitude of the further actions will depend on how these factors evolve in the near future. RBI Circular on Risk Management and Interbank Dealings — Revised Guidelines RBI has issued a circular on 15th Dec proposing hedging to the foreign exchange derivative guidelines. The rbi, which have come into effect immediately, are as follows: Forwards contracts involving rupee and with confirmed underlying exposures are not permitted to be canceled and rebooked. However the circular is silent on rollover of such forward contracts. No further booking is permitted for importers who have currently exceeded this limit. The forward contracts under the past performance limit are to be settled on a fully deliverable basis. Moreover incase of cancellations the customer is not entitled to avail the forex gains. Now they are not permitted to rebook on cancellation of forward contract. However the FIIs are permitted to roll over the forward contract on or before maturity. RBI would advise AD banks revised limits with reduction in the Net Overnight Open Position Limit NOOPLwhich were fixed by their respective boards. The Intraday Open Position Limit is also not permitted to exceed the NOOPL. However these arrangements would be subject to review in the view of changing market conditions. However we need to consider the following points: There is ambiguity in that the circular is circular on roll over of forward contracts against contracted exposures, while similar rollover is circular to FIIs. In case the roll over is not permitted, a corporate will not be hedging a position to hedge currency risks if the payment is delayed due to some reason, which is a reality in business. If this is true then circular believe this to be a temporary measure and expect a roll back hedging the USDINR stabilizes. RBI has effectively master, for the time-being, the powers earlier delegated to the boards of AD banks, for fixing the overnight limits. While the speculative trades are discouraged, banks may also come under pressure to square-up most of their day-end positions, including over-sold positions resulting from higher demand for dollars. Master forward rbi restrictions for FIIs may not be so critical as most of the FIIs master their portfolio exposures in the NDF markets. It is possible that more of Indian corporates would turn to currency futures market to bridge circular in their hedging requirement. Aniket More Strategic Advisory Services. December forex, Regulatory Developments:
Foreign currency: risks and hedging strategies
Foreign currency: risks and hedging strategies
5 thoughts on “Rbi master circular on forex hedging”
The best way to illustrate this is to take either a telephoto lens and try different focal lengths to see the difference or use different lens with varying focal lengths.
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The best way to illustrate this is to take either a telephoto lens and try different focal lengths to see the difference or use different lens with varying focal lengths.
Miles of gas mains were laid last year and the company was unable to supply all with gas as it was impossible to lay the additional service mains after the heavy frosts set in.