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RBI may ease curbs on forex trading

In December last year, the RBI had imposed restrictions on forward trading in the local currency by FIIs and traders, and capped banks exposure to the forex market to curb excessive volatility in the rupee.

The RBI may gradually relax curbs on intra-day trading limits in foreign exchange with an aim to facilitate "genuine" hedging requirements.

In December last year, the RBI had imposed restrictions on forward trading in the local currency by FIIs and traders, and capped banks exposure to the forex market to curb excessive volatility in the rupee.

"Within the overarching pre-requisite of facilitating genuine hedging needs of the customers, RBI would consider relaxations, in particular those relating to intra-day position limits, in a calibrated manner at appropriate time," RBI Deputy Governor H R Khan said.

During the recent episode of excessive volatility, he said, "It was noticed that the flexibility given to banks for fixing their intra-day limits...were often being used for building up speculative positions and taking a directional bet on rupee."

Khan said the measures taken by the RBI in December did achieve the intended policy objectives and also led to an immediate fall in the volumes of the markets.

The restrictions helped in stemming the slide of the rupee against the dollar. It had touched an all time low of 54.30 against the dollar in December.

Meanwhile, the rupee on Wednesday closed marginally higher by 5 paise at 51.42/43 versus the dollar on fresh dollar selling by banks.