Reserve Bank of India clarifies 20% reserve on rupee contracts
Business
The Reserve Bank of India (RBI) just clarified its latest foreign exchange move: a 20% reserve requirement on certain rupee-linked contracts where people buy foreign currency against the rupee, but only if the deal is more than $2 million and intended to hedge current account exposures.
This update comes after some market confusion earlier this week and aims to keep things steady for the Indian rupee.
Contracts $2 million or less are exempt
If your contract is $2 million or less, you're off the hook: no extra reserve needed.
But RBI is warning against splitting deals just to dodge the rule.
The goal here is less chaos in currency markets and more clarity for everyone dealing with dollars and rupees.