RBI eases forex rules further

With India8217;s record forex reserves zooming and the rupee strengthening against the dollar, the central bank has announced a series of measures to ease currency market regulations which could bring the rupee closer to a free float.

The Reserve Bank of India RBI said it will allow banks to offer foreign currency swaps without any limits, to enable them to hedge their foreign currency liabilities. It is also giving banks the freedom to invest any amount in overseas money market and debt instruments, indicating that the move towards full convertibility is gathering steam.

The RBI brought in a series of measures earlier in the year aimed at steadily relaxing foreign exchange rules. In early November, it allowed overseas funds to hedge their entire foreign currency exposures arising from investments in Indian equities instead of just 15 per cent earlier.