RBI panel moots change in timings for foreign exchange market

The Reserve Bank of India seal on a gate outside the RBI headquarters in Mumbai. File   | Photo Credit: Reuters

An internal committee of the Reserve Bank of India (RBI), which was set up to review timings of different financial markets, suggested that the foreign exchange market could function from 9 am to 9 pm At present, the currency market works from 9 am to 5 pm.

“Calibrated extension of market hours, and to begin with, revised market timings of 9 am — 9 pm, may be considered to gauge demand and potential benefits,” the draft report of the committee said.

The report noted that there are mixed views on the benefits of extension of market timing.

Higher costs

“While the extension of market timings is expected to provide benefits such as better pricing of post market hours information/data, improved onshore price discovery and a possible shift of offshore volumes to onshore, there is a view that it may entail higher costs to stakeholders,” it said.

Since the central bank is in the process of reviewing and rationalising foreign exchange regulations to provide flexibility regarding products, participation and positions, both for residents and non-residents, extension of market hours would complement these policy measures, the draft said.

The panel suggested call money market timings could be extended till 6 pm instead of the 5 pm now, to facilitate liquidity management by banks.

The current market timings for government security markets may be retained, the draft said, on account of lack of demand from participants.

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Printable version | Jun 11, 2021 3:30:58 AM |

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