RBI tightens hedging rules as costs could rise 80-150 bps
The Reserve Bank of India (RBI) just rolled out new rules to slow down companies scrambling to hedge against the falling rupee, especially with oil prices on the rise.
These changes make it possible for hedging costs to rise by up to 80-150 basis points for businesses to protect themselves from currency swings, depending on how much of the additional cost banks pass on to clients.
One big move: oil marketing companies can now buy US dollars straight from the RBI, which should ease some pressure on the rupee.
Rupee down nearly 7% this year
The rupee has dropped nearly 7% this year, mostly thanks to pricey oil and money leaving Indian markets.
The RBI's new rules also mean banks need extra reserves for large hedges and can't easily rebook certain deals, which actually helped the rupee bounce back a bit in recent trading.
Bottom line: these steps show the RBI is serious about keeping the rupee steady as global markets stay unpredictable.