To enhance the depth of the foreign exchange market, the Reserve Bank today allowed foreign investors to participate in the domestic exchange-traded currency derivatives, a segment where volumes have declined.
"With a view to improving the depth and liquidity in the domestic foreign exchange market, it has been decided to allow foreign portfolio investors to participate in the domestic exchange-traded currency derivatives market to the extent of their underlying exposures plus an additional $ 10 million," the Reserve Bank of India said in its Second Bi-Monthly Monetary Policy Statement.
"It has also been decided to allow domestic entities similar access to the exchange-traded currency derivatives market," it said. The RBIhad in July last year imposed curbs such as doubling of margin requirement and a ceiling on position limits on exchange-traded currency derivatives.
The restrictions were imposed to check speculation in the foreign-exchange market.
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