Reserve Bank of India (RBI) issued draft guidelines on how
Indian subsidiaries of multinational companies can hedge their currency
exposure risk in the country.
RBI said on Friday that subsidiaries looking to hedge their
exposure outside of exports and imports could do so through all foreign
currency-rupee derivatives, over-the-counter, and exchange-traded products.
It also said profits and losses arising from hedging
transactions in India must be reflected in the books of the domestic
subsidiaries of multinational companies, among other guidelines.
Previously, multinational companies could only hedge
currency risk arising out of transactions involving imports and exports.
The RBI had said last month that it would widen the scope of
activities where hedging was allowed.
Market participants and banks can submit their comments
about the proposed guidelines by Nov. 11, the RBI said.
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