RBI Governor Affirms No Shift in Policy Regarding Exchange-Traded Currency Derivatives: The Governor of the Reserve Bank of India (RBI), Shaktikanta Das, reiterated on Friday that it remains a mandatory requirement for Exchange-Traded Currency Derivatives (ETCD) transactions to have underlying exposure. He dismissed any possibility of reconsidering this requirement.
For the seventh consecutive time, the Reserve Bank of India (RBI) has chosen to maintain the key policy repo rate at 6.5%, the highest level since August 2018. The six-member Monetary Policy Committee (MPC) has also decided to continue with the "withdrawal of accommodation" stance. This is aimed at ensuring that inflation gradually moves towards the target while also supporting economic growth. Consequently, the standing deposit facility (SDF) rate remains steady at 6.25%, and both the marginal standing facility (MSF) rate and the Bank Rate remain unchanged at 6.75%.
The RBI postponed the implementation of its new framework for the ETCD market from April 5 to May 3 due to concerns over market participation. Leading up to the deadline, there was a notable increase in volatility in the forex market.
Addressing reporters following the monetary policy review announcement, Governor Das stated, "There has been no change in the RBI’s policy regarding the ETCD market. The necessity for underlying exposure has consistently been a part of the RBI’s policy for many years."
The Governor's affirmation underscores the RBI's commitment to maintaining stability and transparency within the currency derivatives market.
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