MUMBAI: With the rupee sniffing at 97 a dollar, the Reserve Bank of India (RBI) on Saturday announced as slew of measures in a desperate bid to stem the freefall of the national currency.
It drastically slashed the forex derivative positions a bank can hold in the net open position to just $5 million from the already curbed $100 million, to curb speculation.
The central bank also barred authorised dealers from rebooking cancelled rupee-linked derivative contracts and introduced a 20% cash reserve requirement for large transactions to strengthen market discipline. That apart, it also opened a special dollar window for oil importers.
On Friday, it had raised the minimum daily maintenance requirement for the cash reserve ratio (CRR) from 90% to 99% of the prescribed requirement, effective October 16.
This was the first time since July 2013 that the RBI had increased the daily CRR requirement following pressure on the rupee, which has already lost more than 7% this year after the US Fed began tightening.
The measures comes amid evolving conditions in the forex market and are aimed at ensuring its orderly functioning, the central bank said.
Under the revised norms, authorised dealers will not be permitted to allow users to rebook any foreign exchange derivative contract involving the rupee, whether deliverable or non-deliverable, if it was cancelled with an authorised dealer after issuance of the directions. Rollover of contracts on maturity will continue to be permitted, subject to existing regulatory requirements.
The RBI also tightened documentation requirements to prevent the same underlying exposure from being hedged through multiple authorised dealers.
OMCs get spl window
The RBI created a special window for oil marketing companies (OMCs) to take the dollar demand away from the spot market. Three state-run OMCs are one of the biggest consumers for the dollar