The Reserve Bank of India, on Thursday (June 20, 2019), communicated that the electronic trading platform for buying/selling foreign exchange (FX-Retail) by retail customers (individuals, MSMEs) of banks is ready for rollout. The FX-Retail platform can be accessed by retail customers of a bank (through the websitehttps://www.fxretail.co.in), who has a need to purchase or sell…
Devaluation of a currency means the official lowering of value of a country’s currency within a fixed exchange rate system. In devaluation, the monetary authority of the country deliberately make downward adjustment of the value of a country’s money and sets a new fixed rate with respect to a foreign reference currency (currency of other…
Clearing corporation of India has developed a new platform which will be available for users by early August this year according to RBI communication. During 2017, RBI had proposed a foreign exchange trading portal for retail participants with an idea that would provide customers access to an online electronic trading platform on which they can…
Currency derivatives are exchange-based futures and options contracts that allow those with a significant exposure to imports or exports, use these contracts to hedge against their exposure to a certain currency. In India, one can use such derivative contracts to hedge against currencies like US Dollar, Euro, U.K. Pound and Yen so as to manage…
Options are contracts through which a seller gives a buyer the right, but not the obligation, to buy or sell a specified asset (Ex: Foreign currency, shares, equities, commodities etc.) at a predetermined price, by a certain date. It means they acquire or dispose of the underlying asset at that price called the strike price.…
ECGC is designed to guard exporters from the consequences of the payment risks, both political and commercial, which enables the exporters to expand their overseas business without fear of loss. ECGC covers losses that may be incurred in extending loans by the banks and other financial intermediaries to exporters. The major forms of Guarantees offered…
(This post explains how bank calculate early delivery or cancellation losses of forward contract with examples) Whenever an exporter wants to undertake a Forward (Sale) Contract against his receivable he will do so with a rough idea of the time period in which he can expect his buyer to send the payment. Forward contract is…
A forward contract is a customized contract between two parties to buy or sell an asset at a price agreed upon today on a specified future date. Under forward contract, there is an obligation for the buyer to pay for what has been bought and receive delivery thereof as per the contract, and for the…
Section 2(j) of FEMA states that ‘Current Account Transaction’ means a transaction other than a capital account transaction. Non-trade current account transaction refers to transactions not related to foreign trade transactions (such as exports and imports of goods and services of a country). Effective 1 June 2015, under the Liberalised Remittance Scheme (LRS) made available…
The AD Category-I banks are permitted to issue Bank Guarantee to non-resident service provider on behalf of resident customer of the bank. The maximum limit for issue of such guarantee is fixed up to USD 500,000 (increased from previous limit of USD 100,000) or its equivalent. The above limit is not applicable in the case…