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Rupee interest rate derivatives
Why is it in the news
- The Reserve Bank of India allowed non-residents to participate in the rupee interest rate derivatives segment with a view to deepen the rupee interest rate swap (IRS) market.
More in the news
- A non-resident will be allowed to undertake transactions in the rupee interest rate derivatives markets to hedge an exposure to rupee interest rate risk and other specified purposes.
- Also, the foreign portfolio investors (FPIs), collectively, can transact in interest rate futures (IRF) up to a limit of net long position of Rs 5,000 crore.
- There is an active market for rupee interest rate swap offshore, and the exercise is aimed at increasing participation of non-residents in the domestic market, it had said in April.
- It had also observed that while the rupee interest rate swap market was most liquid among the interest rate derivatives market, it lacked depth to enable large banks to manage risks.
- Also, Indian market has witnessed increasing participation from non-resident players like FPIs in debt.
Source
The Hindu.