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To control the slide of rupees, RBI imposes restrictions on Banks

Mumbai, Tue, 09 Jul 2013 NI Wire

In a bid to control the slide of rupees, the Reserve Bank of India (RBI) has imposed restrictions on speculative trading in currency by banks. Needless to say it has lost almost 10 percent of its value this year.

According to sources, the central bank has put restrictions on banks for trading in currency futures and options with immediate effect.

The RBI has said, “On a review of the evolving market conditions, it has been decided that authorised dealers category banks should not carry out any proprietary trading in the currency futures or exchange traded currency options markets.”

“In other words, any transaction by the authorised dealers category banks in these markets will have to be necessarily on behalf of their clients,” the RBI said in a circular addressed to “All Authorised Dealer Category - I Banks”.

It further added that these instructions shall come into effect immediately and shall be in force till further orders.The RBI move came amidst a sharp depreciation in the value of rupee.

It is noted that the Indian rupee has lost almost 10 percent of its value since the beginning of this year. The rupee hit a record low of 61.21 against a dollar Monday, surpassing its previous record low of 60.76 touched on June 26.

However the rupee gained some ground after the RBI move. It rose to 59.60 level as against its previous day's close at 60.61.

(With inputs from IANS)

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