Currency derivatives limit raised to $100m

MUMBAI: The limit for taking positions on currency derivatives for persons resident in India and foreign portfolio investors (FPIs) has been substantially raised to a combined value of $100 million across all currency pairs and combined across all exchanges, a statement from Reserve Bank of India (RBI) said.

Under the existing system persons resident in India and FPIs are allowed to take a long (bought) or short (sold) position in USD-INR up to $15 million per exchange without having to establish existence of underlying exposure.

The new regime allows the residents and FPIs to take long or short positions in EUR-INR, GBP-INR and JPY-INR pairs, all put together, up to $5 million equivalent per exchange without having to establish existence of any underlying exposure

The onus of complying with the provisions of this circular rests with the participant in the exchange traded currency derivatives (ETCD) market.

“In case of any contravention, the participant shall be liable to any action that may be warranted as per the provisions of Foreign Exchange Management Act (FEMA), 1999 and the regulations, directions, etc. issued thereunder. These limits shall also be monitored by the exchanges, and breaches, if any, may be reported to the Reserve Bank of India (RBI),” the statement added.

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