RBI allows importers to book forward contracts upto 50 pc

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SME Times News Bureau | 28 May, 2014
Giving some relaxations to importers in hedging, Reserve Bank of India Tuesday allowed them book forward foreign exchange contracts up to 50 percent of the eligible limit, reports media.

"It has been decided to allow importers to book forward contracts, under the past performance route, up to 50 per cent of the eligible limit," the RBI said in a notification.

This, the RBI said, has been done after a review of the evolving market conditions and with a view to providing importers with greater flexibility in hedging facility.

The earlier limit for such contracts was 25 percent. It further said importers who have already booked contracts up to previous limit of 25 percent in the current financial year.

Under the extant guidelines relating to hedging of currency risk of probable exposures based on past performance, importers are allowed to book contracts up to 25 percent of the eligible limit.

The eligible limit is computed as the average of the previous three financial years? import turnover or the previous year's actual import turnover, whichever is higher.