Uddhav Thackeray's aggression

Uddhav Thackeray's aggression

From all accounts, Shiv Sena chief Uddhav Thackeray appears an unlikely candidate for a skirmish...
HC rejects PIL against Robert Vadra

HC rejects PIL against Robert Vadra

A PIL had sought CBI probe into various land deals allegedly entered into by Robert Vadra's firms.

NDF market crackdown, Raghuram Rajan effect helping Indian rupee: Experts

Sep 15 2013, 16:47 IST
Comments 0
Raghuram Rajan Raghuram Rajan
SummaryOn the day Raghuram Rajan took over as RBI Guv, the rupee gained by 56 p to 67.07.

The reported crackdown on speculative trading in the non-deliverable forward (NDF) market by the government and steps taken by recently-appointed RBI Governor Raghuram Rajan brought stability to the Indian rupee in the forex market last week, analysts and treasury heads say.

Related: Raghuram Rajan: First speech as new RBI Governor

NDF is a forex derivative instrument, traded over-the-counter and operated in currencies that are freely convertible unlike the rupee. "It seems the RBI and finance ministry officials gave a dressing down to the NDF players," a forex analyst with a brokerage said.

On the day Raghuram Rajan took over as RBI Governor (September 4), the Indian rupee gained by 56 paise to 67.07, while on the last working day of his predecessor D Subbarao on September 3, the rupee had tanked 163 paise to 67.63.

Related: Indian rupee recovers early losses, edges up 2 paise to 63.48 vs USD

Between September 3 and 13, the Indian rupee rallied 6.2 per cent to close the last trade at 63.48 to the greenback.

Earlier this month the one-month NDF market was quoting at 70 to the dollar. The rupee plunged to its life-time depth on August 28 (68.85 intra-day and closing at 68.80).

A treasury head with a private-sector bank said, "Since the past six trading sessions, the volumes have come down significantly in the NDF market."

The NDF, or the offshore, market remains outside the regulatory purview of the Reserve Bank of India (RBI) but it controls the onshore market to a considerable extent. The RBI does not allow domestic financial institutions to trade in the NDF markets.

Economic affairs secretary Arvind Mayaram, on August 31, had a closed-door meeting with treasury heads of the leading foreign banks. According market participants, it was primarily aimed at controlling the NDF market, where the rupee was getting shorted aggressively.

Shorting, in this case, is the sale of a borrowed currency with the hope that its value will fall in future. If the currency actually falls in price, the investor buys it for less than he or she sold it, thus making a profit.

Foreign exchange dealers, however, also attributed the rally in the rupee to the sentiment-boosting measures announced by Raghuram Rajan, apart from some liquidity easing measures.

Forex market analysts feel once foreign banks branches operating here come under the ambit of the RBI, the central bank would be in a better position to curb trading in NDF.

An

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...