RBI task force submits report on offshore rupee markets

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Published: August 9, 2019 1:22:26 AM

The key recommendations of the task force include extending onshore market hours to improve access of overseas users and permitting Indian banks to freely offer prices to global clients around the clock.

RBI, RBI task force, Reserve Bank of India, offshore rupee markets, stabilityThe recommendations also included enabling rupee derivatives (settled in foreign currency) to be traded in the International Financial Services Centers (IFSC) in India, to begin with on exchanges in the IFSC. (Reuters)

The Reserve Bank of India’s (RBI) task force, chaired by Usha Thorat, set up to examine the issues relating to the offshore rupee markets has submitted its report to the governor, the central bank said on Thursday.

The task force was set up to examine issues relating to the offshore rupee markets in depth and recommend appropriate policy measures while factoring in the requirement of ensuring stability of the external value of the rupee including measures for incentivising non-residents to access the onshore foreign exchange market.

The key recommendations of the task force include extending onshore market hours to improve access of overseas users and permitting Indian banks to freely offer prices to global clients around the clock. The recommendations also included enabling rupee derivatives (settled in foreign currency) to be traded in the International Financial Services Centers (IFSC) in India, to begin with on exchanges in the IFSC.

The task force has also recommended in its report to allow users to undertake forex transactions up to $100 million in over the counter (OTC) currency derivative market without the need to establish underlying exposure.

Other recommendations include facilitating non-residents to hedge their foreign exchange exposure onshore by establishing a central clearing and settlement mechanism for non-resident transactions in the onshore market, implementing margin requirement for non-centrally cleared OTC derivatives and allowing Indian banks to post margins abroad.

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