RBI’s guidelines for forex hedging by foreign companies

Q.  RBI has issued guidelines for forex hedging by which companies?
- Published on 07 Nov 16

a. MSME
b. Foreign
c. Domestic
d. None of the above

ANSWER: Foreign
 
RBI’s guidelines for forex hedging by foreign companiesRBI has issued guidelines for forex hedging by global companies.
  • The guidelines are on how Indian subsidiaries of MNC companies can hedge their currency exposure risk in the nation.
  • RBI indicated on 4th Nov indicated that subsidiaries looking to hedge their exposure outside of exports and imports could use foreign exchange currency rupee derivatives, OTC and exchange-traded products.
  • Profits and loss arises from hedging transactions in India as reflected in books of domestic subsidiaries of MNC among other guidelines.
  • RBI is aiming to widen the scope of activities where hedging is permitted.
  • Market participants and banks can submit their comments about the proposed guidelines by Nov 11, the RBI has said.

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