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Regulators Toughen Rules To Curb Rupee Fall

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India's regulators toughened rules for derivatives trading in the currency market in a bid to arrest the steep decline of the rupee, which fell to a record low against the dollar on 8 July.

The Reserve Bank of India, in a notification issued late on 8 July, banned banks from proprietary trading in domestic currency futures and the exchange-traded options market.

In a separate order, SEBI doubled the margin requirement on the domestic dollar-rupee forward trade, which means investors will now have to pay twice as much in margins for a transaction at the time of the trade itself.

SEBI also imposed fresh restrictions on open interest on USD-INR trades.

"In consultation with RBI and in view of the recent turbulent phase of extreme volatility in USD-INR exchange rate, it has been decided to curtail position limits and increase margin requirements for Currency Derivatives," the SEBI circular said.

(Reuters)