NDF access will help tame rupee volatility, say dealers
The decision by India’s banking regulator to allow domestic banks to trade rupee non-deliverable forwards will help curb volatility in the currency, observers say. Rupee volatility has been especially pronounced during the coronavirus-fuelled rout in financial markets.
The Indian rupee NDF market is also likely to become more liquid and prices should begin to converge with onshore forwards as Indian banks start trading offshore, they add.
“Liquidity will improve in the offshore markets,” says