Sunday, December 15, 2013

RBI questions on FC arbitrage

The Reserve bank of India (RBI) has questioned Foreign Currency (FC) arbitrage transactions. Dollars bought from Mumbai branch of a foreign bank and sold to same bank in Singapore. Such trades allow companies to profit from arbitrage in forward trade in two markets. But forward trades such as dollar buying weakens the spot rupee as well. RBI is unhappy with the banks undertaking such transactions.

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