ETCD directives don't go well with RBI's stellar reputation

The RBI move goes against the trend of allowing more flexibility and therefore, retrograde

The recent decisions of the Reserve Bank of India (RBI) to not allow from April 5 transactions in exchange traded currency derivatives (ETCD) without underlying exposure to currency fluctuation risks and  then allowing such trading till May 3, through a press note released after closing hours on April 4, have taken professionals familiar with foreign exchange markets by surprise.

Trading in ETCD without establishing the existence of any underlying exposure has been going on since 2007, when RBI allowed currency futures to be traded on the exchanges approved by the Securities and Exchange Board of India (Sebi).

The RBI’s AP