Welcome steps towards developing onshore currency markets in India

“The RBI has taken some important and relevant steps, including allowing individuals and corporates with actual FX exposures to hedge their exposures in the currency futures market upto $250,000 and also FIIs participating in the Indian fixed income market would be allowed to hedge their coupon receipts which fall due over the next 12 months. These are a welcome steps towards developing the onshore currency market in India further. The rupee has seen speculative bets in the offshore market last year, and these steps will help deepen domestic currency market further. The relaxations also indicate some degree of comfort from the RBI’s perspective towards India’s external financing situation.”