The rupee gained a bit versus the US dollar this week after the Central Bank on Monday imposed restrictions on forward purchases of foreign currency. On Friday, the dollar was trading at around Rs. 191 while on Wednesday it was around Rs. 192 per 1$. Dealers said the rate came down from a high of [...]

Business Times

Rupee gains on CB restrictions

View(s):

The rupee gained a bit versus the US dollar this week after the Central Bank on Monday imposed restrictions on forward purchases of foreign currency.

On Friday, the dollar was trading at around Rs. 191 while on Wednesday it was around Rs. 192 per 1$. Dealers said the rate came down from a high of Rs. 200 last week owing to the new restriction.

The Central Bank announced on Monday that “in view of the need to avoid excess volatility in the foreign exchange market and the impact on the banks’ risk management, licensed commercial banks are hereby informed to refrain from entering into forward contracts of foreign exchange for a period of three months with immediate effect”.

Forward purchases happen when importers book foreign currencies to be purchased ahead, in three or six months, at a fixed rate. This means they buy the foreign currency for their transaction at the agreed fixed rate irrespective of whether the currency has appreciated or depreciated at the time of the eventual transaction.

Money dealers said this was believed to be the first time the banking regulator has imposed restrictions on forward bookings of foreign currency.

Share This Post

WhatsappDeliciousDiggGoogleStumbleuponRedditTechnoratiYahooBloggerMyspaceRSS

Advertising Rates

Please contact the advertising office on 011 - 2479521 for the advertising rates.