RBI in action to control Rupee slide in the market | Dollar V/S INR may stabalize

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The Reserve Bank today swung into action to check slide in rupee value against dollar and speculations. RBI has imposed restrictions with immediate effect on forward trading in the local currency by Foreign Institutional Investors and traders and capped banks exposure to the forex market. The Reserve Bank has also decided to withdraw the facility of re-booking forex contracts by companies and reduced across-the board exposure limits of banks which are authorised to deal in the foreign currency.

The central bank said these steps have been taken in view of the developments in the foreign exchange market.

Rupee today slipped to sub-54 level for the first time in its history and touched a low of 54.30 against the dollar. In the last nearly four and half months, the rupee has declined by about 20 per cent against the dollar.

I. Under contracted exposures, forward contracts, involving the Rupee as one of the currencies, booked by residents to hedge current account transactions, regardless of the tenor, and to hedge capital account transactions, falling due within one year, were allowed to be cancelled and rebooked.

It has now been decided to withdraw the above facility. Forward contracts booked by residents irrespective of the type and tenor of the underlying exposure, once cancelled, cannot be rebooked.

ii. Under probable exposures based on past performance residents were allowed to hedge currency risk on the basis of a declaration of an exposure and based on past performance up to the average of the previous three financial years’ (April to March) actual import/export turnover or the previous year’s actual import/export turnover, whichever is higher. Further, contracts booked in excess of 75 per cent of the eligible limit were to be on deliverable basis and could not be cancelled

 
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