New FX curbs sow confusion, bankers await clarity on dealing rupee derivatives

India's latest foreign-exchange curbs have sown confusion among bankers, with some taking a broad interpretation of the cash-margin requirement and holding back on quoting rupee forwards.

Seven bankers Reuters spoke to on Tuesday said they did not plan to quote dollar/rupee forwards, citing the central bank's directive that the cash-margin requirement applies to all rupee derivative transactions. They were concerned that the mandate could potentially extend to interbank transactions.

A person familiar with the central bank's thinking said the interpretation was not correct, clarifying that the cash-margin requirement was not intended to cover interbank transactions.


The central bank did not immediately respond to an email seeking comment.