With the rupee stabilising between 61 and 62 against the dollar, the capital market regulator SEBI is considering loosening its norms for exchange-traded currency derivatives.
On July 8, the capital market regulator had revised position limits for exchange-traded currency derivatives.
In consultation with the RBI, it was decided to curtail position limits and increase margin requirements to curb speculation in the market. The other measures included raising initial and extreme loss margins by 100 per cent of the present rates for dollar-rupee contracts in currency derivatives. Besides, the gross open position of a client across all contracts will not be permitted to exceed 6 per cent of the total open interest or $10 million (whichever is lower). At the same time, the gross open position of a trading member, which is not a bank, across all contracts, was capped at 15 per cent of the total open interest or $50 million (whichever is lower).
“The capital market regulator is waiting for RBI’s consent before taking any step to unwind the measure,” a senior Government official said. However, RBI’s worry on the rupee front is not yet fully over, the official added.
And with tapering of quantitative easing (monthly buying of bonds worth $85 billion by the US Fed) set to kick off any time now, the monetary authority would prefer greater stability in the currency market before rolling back, fully or partially, the measures put in place in July to lend support to a sagging rupee, he said.
In fact, this issue came up for discussion during the meeting of the Sub-Committee of Financial Stability and Development Council (FSDC) held in Kolkata on December 12. The meeting was chaired by RBI Governor Raghuram G. Rajan and attended by SEBI Chief U.K. Sinha, IRDA Chief T.S. Vijayan and FMC Chairman Ramesh Abhishek, besides others.
An official statement issued after the meeting said it discussed “the recent trends in the current account deficit and relative stability in the foreign exchange markets due to measures initiated by the regulators and the Government and also the improvement in the external environment.”
On Tuesday, it closed around 62.