MUMBAI 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)
Trending On Reuters
The United States and India have held talks about conducting joint naval patrols that a U.S. defence official said could include the disputed South China Sea, a move that would likely anger Beijing, which claims most of the waterway. Story