RBI eases limit in exchange traded currency futures market

MUMBAI: The Reserve Bank of India has lifted the mood in the exchange traded currency futures market after the central bank raised the single investment limit to $100 million per user compared with a meagre $15 million per exchange for dollar-rupee pair.

The move should help garner more currency futures trading volumes for domestic exchanges especially when Singapore Stock Exchange and Dubai Gold and Commodity Exchange have outstripped their Indian counterparts including NSE and BSE in the segment.

“It is now proposed to merge these position limits these position limits across all foreign currency-rupee pairs and provide a single limit of $100 million per user (both resident and non-resident ) across all exchange traded currency derivatives, in all exchanges combined,” RBI said in the policy statement.


Now, the limit is $5 million per exchange for other currency pairs including euro, yen and sterling with the rupee.

“The move is expected to create arbitrage opportunity between onshore and offshore markets,” said Anindya Banerjee, currency analyst at Kotak Securities. “Non-resident Indians will be encouraged to take positions in the currency futures market now.”

This limit was last reviewed in March, 2015. RBI has subsequently permitted introduction of currency option contracts involving the rupee on exchanges.