RBI mandates 20% reserve on banks’ own forex hedges
In short
The RBI has told authorised dealers to keep a 20% reserve on eligible rupee derivative contracts used to hedge their own currency risk. The rule applies without a minimum transaction size.
This matters for banks and currency markets because it makes these hedges more tightly controlled. The reporting does not say when the change starts.
What the reporting says
The RBI mandated a 20% reserve on eligible rupee derivative contracts used by authorised dealers to hedge their own currency risks, according to the publisher summary. The measure extends the reserve requirement to banks’ own hedging contracts and applies without a minimum transaction threshold. The immediate effect is tighter use of such hedges, but the reporting does not say when the rule takes effect.
Why it matters
The RBI mandated a 20% reserve on eligible rupee derivative contracts used by authorised dealers to hedge their own currency risks, with no minimum transaction threshold, according to the summary. The move extends the reserve requirement to banks’ own hedging contracts. The immediate impact is a tighter rule for currency risk management by banks and authorised dealers, though the implementation timing is not stated.