Exporters support new hedging rules
Updated: Mar 29, 2014 02:05:05pm
New Delhi, March 29 (KNN) Welcoming the revised guidelines on currency hedging for exporters and importers, allowing them to cancel contract up to 75 per cent of their entitlement and gain or lose as the case may be, apex body for the exporters, FIEO said that prior to the change, exporters were asked to shell for loss and even gains were pocketed by the banks.
“…RBI has met our demand and restored an equitable arrangement…Prior to the change while exporters were asked to shell for loss, even gains were pocketed by the banks, said President, Federation of Indian Export Organisations (FIEO) M Rafeeque Ahmed.
FIEO chief said that he hopes that shortly this facility will be extended on 100 per cent of the contract, in view of better inflow of dollars and steming of current account deficit which may be lower than 2.5 per cent of GDP.
In order to give more operational flexibility to exporters and importers, the Reserve Bank has made some relaxations on the restrictions related to the hedging of currency risk of their probable exposures.
In order to provide greater operational flexibility, “Contracts booked up to 75 per cent of the eligible limit may be cancelled with the exporter/importer bearing/being entitled to the loss or gain as the case may be,” the RBI had said in a notification.
The eligible limit in the case of exporters is computed as the average of the previous three financial years’ (April to March) actual export turnover or the previous year’s actual export turnover, whichever is higher.
The eligible limit in the case of importers is computed as 25 per cent of the average of the previous three financial years’ actual import turnover or the previous year’s actual import turnover, whichever is higher.
According to the RBI notification, the contracts in excess of 75 per cent of the eligible limit — the export/import turnover of the previous year or average of the previous three years’ turnover, whichever is higher, shall be on deliverable basis and cannot be cancelled.
Further, the profit or loss in the event of the cancellations will be borne by the exporter/importer and not passed on to the customers as was mandated earlier. (KNN/SD)
“…RBI has met our demand and restored an equitable arrangement…Prior to the change while exporters were asked to shell for loss, even gains were pocketed by the banks, said President, Federation of Indian Export Organisations (FIEO) M Rafeeque Ahmed.
FIEO chief said that he hopes that shortly this facility will be extended on 100 per cent of the contract, in view of better inflow of dollars and steming of current account deficit which may be lower than 2.5 per cent of GDP.
In order to give more operational flexibility to exporters and importers, the Reserve Bank has made some relaxations on the restrictions related to the hedging of currency risk of their probable exposures.
In order to provide greater operational flexibility, “Contracts booked up to 75 per cent of the eligible limit may be cancelled with the exporter/importer bearing/being entitled to the loss or gain as the case may be,” the RBI had said in a notification.
The eligible limit in the case of exporters is computed as the average of the previous three financial years’ (April to March) actual export turnover or the previous year’s actual export turnover, whichever is higher.
The eligible limit in the case of importers is computed as 25 per cent of the average of the previous three financial years’ actual import turnover or the previous year’s actual import turnover, whichever is higher.
According to the RBI notification, the contracts in excess of 75 per cent of the eligible limit — the export/import turnover of the previous year or average of the previous three years’ turnover, whichever is higher, shall be on deliverable basis and cannot be cancelled.
Further, the profit or loss in the event of the cancellations will be borne by the exporter/importer and not passed on to the customers as was mandated earlier. (KNN/SD)
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