RBI relaxes restrictions for exporters on foreign exchange earnings

http://www.thehindubusinessline.com/industry-and-economy/banking/article3708171.ece

The Reserve Bank of India relaxed some of the restrictions it had placed on the foreign exchange market over the last six months.

On Tuesday, it allowed exporters to retain all their foreign exchange earnings in foreign currency, for a limited period. It allowed them to partially cancel and rebook forward contracts.

In May, the RBI had ordered that only half of the foreign exchange earnings could be held as it is in foreign currency in Exchange Earner’s Foreign Currency (EEFC) account.

The move was aimed at stemming the rapid depreciation in the rupee against the dollar

On Tuesday, the RBI gave partial relief to companies by allowing them to retain the entire foreign exchange earnings in EEFC account, but for a limited period only. The foreign currency has to be converted in to rupee on the last day of the month following the month in which the money is received.

For instance, if $1,000 is received on June 14, 2012, it can be parked in EEFC account only till July 31, 2012.

The amount converted to rupee can, however, be reduced to the extent of payment commitments in foreign currency of the company.