India's RBI restricts banks from onshore forward markets
Bank treasury FX desks face new limits on onshore forward trading
Change
India's Reserve Bank of India (RBI) imposed restrictions on banks' participation in onshore forward markets, sparking a sharp rupee rebound and supporting equity gains.
Why it matters
Banks' access to onshore rupee forward contracts is now restricted, constraining the availability of bank‑supplied rupee hedges. Treasury and trading desks that relied on onshore bank intermediation will find onshore forward cover harder to obtain.
Implications
- — Bank treasury FX desks at Indian banks must immediately halt new onshore forward trades and adjust outstanding forward positions — continuing to transact risks intervention or blocked settlements under the RBI restrictions.
- — Compliance teams at Indian banks must update trading limits and surveillance rules now — failure to implement the RBI measures exposes the bank to regulatory enforcement actions or supervisory measures.
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Source
View on The Hindu