Last update: August 05, 2022, 11:18 AM IST
RBI Governor Shakti Kant Das said that standalone primary dealers have played an important role in the development of financial markets in India.
RBI has enabled them to transact overnight offshore rupees with non-residents and other market makers.
The Reserve Bank of India (RBI) on Friday decided to offer standalone primary dealers (SPDs) all foreign exchange market making facilities as currently allowed to Category-I Authorized Dealers, which That is under prudential guidelines. It also allowed them to transact offshore rupees in the overnight indexed swap (OIS) market with non-residents and other market makers.
Announcing the bi-monthly August monetary policy on Friday, RBI Governor Shakti Kanta Das said, “Stand-alone primary dealers have played an important role in the development of financial markets in India.”
The central bank has decided to offer all foreign exchange market making facilities to SPDs as currently allowed to Category-I Authorized Dealers, subject to prudential guidelines. “This move will provide customers with a wider set of market makers to manage their foreign exchange risk. It will also increase the breadth of the forex market in India,” said Das.
RBI also allowed standalone primary dealers (SPDs) to transact in the offshore rupee OIS market with non-residents and other market makers.
“This initiative will complement a similar initiative announced for banks in February this year. The RBI Governor added that these initiatives are aimed at bridging the divide between the onshore and offshore OIS markets and Hope to improve price discovery.
The RBI’s Monetary Policy Committee on Friday unanimously decided to raise the repo rate by 50 basis points (bps) to 5.4 percent while focusing on housing returns. It has maintained inflation and GDP forecasts for the current fiscal year 2022-23 at 6.7 percent and 7.2 percent, respectively.
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