RBI eases rules for exporters to access FX market

MUMBAI Tue Jan 22, 2013 10:11pm IST

Foreign currency traders work inside a trading firm behind the signs of various world currencies, in Mumbai May 24, 2012. REUTERS/Vivek Prakash/Files

Foreign currency traders work inside a trading firm behind the signs of various world currencies, in Mumbai May 24, 2012.

Credit: Reuters/Vivek Prakash/Files

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MUMBAI (Reuters) - The Reserve Bank of India (RBI) has allowed exporters to access the foreign exchange market without having to first exhaust funds in their foreign currency accounts, reversing a previous restriction imposed to prevent a sharp fall in the rupee.

The move was triggered by operational difficulties faced by these account holders, the RBI said on Tuesday.

In May 2012, the RBI mandated exporters to sell half of their foreign currency earnings and buy rupees instead of holding them in their exchange earner's foreign currency account (EEFC).

The rupee had been hitting record lows due to global risk aversion and foreign investors' concerns over India's sluggish growth and lack of reforms.

In late June 2012 the currency touched a record low of 57.32 to the dollar.

"This move shows that the RBI is probably comfortable with the rupee's level and may further ease restrictions," said a foreign exchange trading head at a private bank.

The rupee hit a near three-month high of 53.3750 per dollar on Tuesday, before closing at 53.81/82.

(Reporting by Neha Dasgupta)

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