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The Clearing Corporation of India has imposed a 20% volatility margin on dollar-rupee forward trades following sharp market fluctuations triggered by RBI’s curbs on arbitrage. | Photo Credit: iStockphoto The Clearing Corporation of India has imposed an additional margin on dollar-rupee forward trades after witnessing significant volatility in the market, it said on Thursday.Volatility margin imposed amid market swingsCCIL said it would levy a volatility margin of 20% of initial margin with immediate effect under its foreign exchange forward segment regulations.It said the step would raise total margin use for the segment and would also apply to the dollar-rupee options…
India banned its banks from offering the most popular instrument for trading the rupee offshore, threatening to squeeze a $149 billion-a-day market in an extreme step to shore up its tumbling currency.The Reserve Bank of India’s restrictions on non-deliverable derivative contracts will ripple through major currency hubs such as Singapore and London, where trading has exploded over the past decade to about twice the size of the onshore market. The rupee surged the most in 12 years on Thursday.The policy adds to a late-Friday measure that capped lenders’ daily currency positions locally at $100 million, triggering a scramble among banks…
Further steps may follow in RBI’s push to support the rupee, potentially even before its April 8 rate decision. | Photo Credit: FRANCIS MASCARENHAS The Reserve Bank of India jolted currency markets by barring banks from offering the most widely used offshore rupee trading instrument, sending the currency to its biggest gains since 2013.The move — targeting the $149 billion-a-day non-deliverable forwards market — signals a more forceful push after last week’s step of capping onshore positions at $100 million a day provided only a brief reprieve for the battered currency.The measures suggest the authority is prepared to escalate its…
ING’s Frantisek Taborsky notes that Central and Eastern European currencies remain under pressure despite recent gains in the Forint, Zloty and Koruna. He points to holiday-thinned liquidity, geopolitical uncertainty, and still-elevated EUR/PLN and EUR/CZK levels, while Turkish inflation data are expected to keep Central Bank of Turkey rate cuts off the table for the coming months.Regional FX still under pressure”The region is preparing for a long weekend, with the Czech Republic and Hungary closed for trading on Friday. Given the uncertain geopolitical environment, this should lead to a reduction of risk ahead of the extended week despite the risk-on sentiment…
The Indian rupee surged on Thursday after the central bank tightened the screws on speculative bets against the currency, with the Asian unit having its best day since 2013, when policymakers had also resorted to extraordinary measures to stabilise markets.The rupee rallied to a peak of 92.8350 per U.S. dollar, bouncing back sharply from a record low of 95.21 hit in the previous session. The currency closed at 93.10, up 1.8% on the day.It’s been more than a decade since the rupee surged by a comparable magnitude, in September 2013, after emergency measures by the Reserve Bank of India helped…
European Central Bank (ECB) Governing Council (GC) member and Governor of the Lithuanian central bank, Gediminas Simkus, said during European trading hours on Thursday that the central bank needs to exercise caution on interest rates as the situation is changing. However, Simkus added that it is too early to predict what the ECB will do in the April policy meeting.Market reactionNo meaningful impact of ECB Simkus’ comments on the Euro (EUR) as they lack any clear guidance on the monetary policy outlook. As of writing, EUR/USD trades 0.5% lower to near 1.1530 amid risk-off mood. ECB FAQs The European Central…
Indian rupee jumped sharply against the US dollar on Thursday, recording its sharpest single-day rise in more than 12 years, after the Reserve Bank of India (RBI) extended its curbs to offshore derivatives in order to protect the currency from its free fall.Rupee gained nearly 2% to 92.94 against the US dollar today, marking the biggest single-day gain since September 2013. This came despite broader market weakness and persisting FII outflows. RBI’s fresh crackdown on forex speculationThe RBI on Wednesday barred banks from offering rupee non-deliverable forwards to resident and non-resident clients. Banks can still offer deliverable FX contracts for…
The EUR/USD pair struggles to capitalize on its gains registered over the past two days, reaching the weekly top the previous day, and attracts heavy selling during the Asian session on Thursday. Spot prices drop below the 1.1550 level in the last hour amid the emergence of fresh buying around the safe-haven US Dollar (USD) as US President Donald Trump’s update on the Iran war dampens de-escalation hopes.Addressing the nation, Trump threatened that Iran would be hit extremely hard over the next two to three weeks and would be brought to the Stone Age if no deal is reached. Trump…
US President Donald Trump will address the nation at 01:00 GMT on Thursday to give an “update” on the war with Iran, CNN reported. The speech will be the first major national address the president has delivered on the conflict since the first joint US-Israeli strikes on Iran in late February.According to a White House official, Trump is expected to tout US military successes against Iran and reiterate a two- to three-week timeline for concluding the operation.Market reactionAt the time of writing, the West Texas Intermediate (WTI) is down 3.75% on the day at $93.82. WTI Oil FAQs WTI Oil…
Reserve Bank of India has intensified its crackdown on speculative activity in the rupee, this time targeting corporate arbitrage after its initial clampdown on banks failed to alleviate pressure on the currency.Late on Wednesday, the Reserve Bank of India barred banks from offering rupee non-deliverable forwards to resident and non-resident clients. It further said that companies cannot rebook cancelled forward contracts.The series of measures from the central bank comes at a time when the rupee has hit a string of all-time lows on worries over the spillovers from the Iran war. The currency fell 4.24% in March, marking its worst…