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Hedging Surge Prompts India Central Bank Inquiry on Rupee Moves

Hedging Surge Prompts India Central Bank Inquiry on Rupee Moves

Submitted by • July 9, 2013 www.freecommoditycalls.com

Central Bank of India, concerned about fastest growth in currency derivatives trading in over 3 years, is asking overseas funds to prove they aren’t speculating on the rupee. Options and futures trading including the currency rose 47% to daily average of $6.4billion (Rs. 387.7 billion) last month on NSE, the largest jump since 2010. Exchange rate volatility jumped the most in nearly 2 years during the last quarter as rupee slid 8.6%, worst performance of Asia. On 26th June, RBI (Reserve Bank of India) asked overseas funds for proof that individuals accounts were seeking to limit currency risk on securities by using derivatives. Central Bank has enquired about foreign lenders’ open positions involving the rupee.
Supreeth S.M., CEO at Quant First Asset Advisors Indian Limited said there is increased participation from speculators as currency markets are quite volatile. Organizations having external debt payments and those hedging are actively accessing the market.

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