The Reserve Bank of India (RBI) on Monday said select banks in India can offer forex rates to Indian clients beyond the inter-bank market hours, which now run from 9am to 5pm. In effect, this opens up the forex market in India round the clock, allowing Indians to hedge their foreign exchange risks at any time of the day. This will also make the offshore currency markets in Dubai and Singapore less attractive for Indian investors, market players said.
“It has been decided to accept the recommendation of the task force on offshore rupee market to permit authorised dealers category-I banks to offer foreign exchange prices to users at all times, out of their Indian books, either by a domestic sales team or through their overseas branches,” the RBI said in a notification.
“Transactions with persons resident outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours,” it said.
The decision to allow forex market on a 24×7 basis is significant, especially for clients to manage overnight currency risk as they can now hedge beyond local market hours, said a market source.