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Saturday, July 23, 2011

Foreigners can hedge currency exposure in rupee: RBI

Mumbai: In a move that will facilitate greater trade transactions in the rupee, the Reserve Bank of India has allowed non-resident importers and exporters to hedge their currency exposure in the rupee through forward foreign exchange contracts.

With exports and imports invoiced in rupees, non-resident importers and exporters can now hedge their currency risk with banks in India through their bankers having rupee vostro accounts in India, the RBI said in a statement. The contracts would be on a deliverable basis, the central bank said.

Firms with proof of an underlying trade deal denominated in rupees can now use either rupee forwards or options contracts to hedge their deals, it said.

The contracts, once cancelled, cannot be rebooked but may be rolled over on or before maturity subject to maturity of the underlying exposure. Once cancelled, gains can be passed on provided there is no rebooking.

In case of extension, rollover can be permitted once, subject to conditions.

Source: Financial Express


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