The Reserve Bank of India's (RBI) measures to aid operational ease and expand the depth of the foreign exchange (forex) market are likely to help importers and exporters manage their forex risks better.
"The measures will provide room for maneuverability and corporate houses can now sharpen their risk management skills further. There will be a temptation to cancel and re-book forward contracts among importers and exporters. This will help in reducing the volatility in forex rates to a certain extent," said Param Sarma, director and chief executive of NSP Treasury Risk Management Services.
Soon after taking charge, new RBI governor Raghuram Rajan announced a slew of measures to arrest rupee depreciation, attract foreign capital and liberalise the financial sector.
The central bank provided more leeway to exporters and importers in cancelling and rebooking forward exchange contracts.
Exporters will now be permitted to re-book cancelled forward exchange contracts to the extent of 50 per cent of the value of cancelled contracts. Earlier, it was capped at 25 per cent.
"The measures will provide room for maneuverability and corporate houses can now sharpen their risk management skills further. There will be a temptation to cancel and re-book forward contracts among importers and exporters. This will help in reducing the volatility in forex rates to a certain extent," said Param Sarma, director and chief executive of NSP Treasury Risk Management Services.
Soon after taking charge, new RBI governor Raghuram Rajan announced a slew of measures to arrest rupee depreciation, attract foreign capital and liberalise the financial sector.
The central bank provided more leeway to exporters and importers in cancelling and rebooking forward exchange contracts.
Exporters will now be permitted to re-book cancelled forward exchange contracts to the extent of 50 per cent of the value of cancelled contracts. Earlier, it was capped at 25 per cent.
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