RBI to tighten forex reporting

The central bank was almost in the dark about the forex market situation a few months ago when the Indian rupee has been continuously under tremendous pressure by the speculators. According to sources, the RBI did not haveaccurate information about the deals that took place through the ADs due to the laxity in their reporting system. The RBI was sending special team of investors to various dealers to find out the actual position in the market.

The strengthening of RBI monitoring mechanism is viewed as part of the the new government’s policy to keep the Indian rupee at a strong position. The current governor is reportedly in favour of a weak Indian rupee, but is constrained by the new government’s agenda for a strong rupee. The freedom enjoyed by ADs is likely to be further curtailed as the convertibility of Indian rupee has become a distant possibility now.

Getting accurate and upto date information about the inflows and outflows of foreign exchange is obligatory on the part of India as it is a member of the IMF. “As a member of IMF India is obliged to present the quarterly balance of payment statistics to the IMF. The government has accepted Special Data Dissemination Standards (SDDS) prescribed by the IMF which requirethat the publication of BoP data should be made within three months from the closure of the quarter. The BoP statistics are the sources of information for the international community to know about the country’s transactions relating to trade in merchandise, services, assets and liabilities with the outside world that take place during the quarter. The movement of exchange rate in the forex market is also guided by this data,” sources said.