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Non-resident importers and exporters can now hedge their currency risk in respect of exports from and imports to India, invoiced in rupees. The RBI issued the guidelines for the same,on Thursday.
This will facilitate greater use of rupee in trade transactions. It was announced in the Annual Policy Statement 2011-12 that non-resident entities would be allowed to hedge their currency risk with Authorised Dealer banks in India through their bankers having vostro account in India.
According to the RBI guidelines, non-resident exporters or importers can conduct the transaction through their overseas bank (including overseas branches of AD banks in India) or directly with AD bank in India. The products include forward foreign exchange contracts with rupee as one of the currencies and foreign currency-INR options.
According to the guidelines, the amount and tenor of the hedge should not exceed that of the underlying transaction and should be in consonance with the extant regulations.
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