RBI has increased limits on trading on the exchanges of currency derivatives. Earlier, total limits on forex derivatives (of all currency pairs combined) was a ludicrously low $10 million. This was for positions “without underlying exposure” – or, put another way, for speculative trading. Now both domestic residents and Foreign Portfolio Investors can: Take positions upto $15 million each in the USD-INR pair, per exchange Take a total position of $5 million per exchange in the remaining pairs (EUR, JPY and GBP to INR) Importers can hedge upto 100% of their exposure at exchanges (currently only 50%) Additionally, they have eased documentation needs – instead of getting a statutory auditor statement that these importer restrictions have been met, the new deal is only to have a top executive sign off on a statement instead. It’s incredible that we have such insane levels of documentation and regulatory nitpicking for something as simple as a dollar-rupee trade.… (Read On…)
[via Capital Mind]
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