Usha Thorat panel suggests liberal currency market for offshore usersDate: 09 August 2019 Tags: Monetary Policy & RBI
Context: The task force on offshore rupee markets, headed by former Dy. Governor Usha Thorat, has submitted its report to the RBI
- It has suggested for extending trading hours to improve access of overseas users and allowing Indian banks to freely offer prices to global clients around the clock.
- Allow users to undertake foreign exchange transactions up to $ 100 million in OTC currency derivative market without the need to establish underlying exposure.
- Enable rupee derivatives (settled in foreign currency) to be traded in the International Financial Services Centres (IFSC) in India.
- To facilitate non-residents to hedge their foreign exchange exposure onshore, the task force recommended establishing a central clearing and settlement mechanism for non-resident transactions in the onshore market.
- Align the tax treatment with global standard
Significance of the off shore rupee market:
- The offshore rupee market has been making a larger impact on the local currency market helping with better price discovery and driving volatility, prompting RBI to look for ways to ensure greater stability for the rupee.