Mumbai, May 21 : As rupee breached the 55 level to its all-time low, the Reserve Bank today imposed restrictions of USD 100 million on “position limit” for forward contracts by banks.
“The position limit for the trading member...bank in the exchanges for trading Currency Futures and Options shall be USD 100 million or 15 per cent of the outstanding open interest, whichever is lower,” RBI said in a notification.
It also advised the banks dealing in foreign currency to bring down their trading limits by June-end. Meanwhile, the rupee today closed at 55.03, a fall of 61 paise or 1.12 per cent from its previous close. The RBI notification said that the current Net Overnight Open Position Limit (NOOPL) of the authorised banks will not include the positions undertaken in the currency futures and options (F&O) segment in the forex market.
It further added that the position in the F&O segment cannot be offset by undertaking positions in the over-the-counter market and vice-versa.
RBI had earlier taken host of steps to arrest the fall of value of rupee which has been declining at a rapid pace. The currency has lost over 22 per cent in the last one year and about 11 per cent since March this year.
The pressure increased especially since mid-March, when the foreign funds started withdrawing from the Indian stock market. The foreign institutional investors have pulled out Rs 1,109 crore in April and Rs 206 crore in May after pumping in net Rs 44,000 crore in January, February and March exerting pressure on the country's current account deficit.
Erosion in rupee value has meant increasing cost of imports, including crude oil. But for correction in the crude oil prices in the global markets, the situation would have
been precarious.
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