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FX F&O expiry pressure to ease post afternoon, banking source says

Informist, Tuesday, Jun 28, 2022


–Banking source: Rupee under pressure due to futures expiry


By T. Bijoy Idicheriah


MUMBAI – The Reserve Bank of India has been communicating to market participants that the stress on rupee levels will ease once the expiry pressure due to derivatives contracts eases post afternoon, a banking industry source told Informist.


“The pressure on the rupee due to futures expiry is temporary and will pass by afternoon today,” the source said. “It is a reflection of how the markets were positioned than the actual fundamentals of the rupee.”


Today, the Indian currency fell to an all-time low of 78.7425 a dollar, down 0.5% from Monday.


The rupee slipped today because the prices of crude oil jumped due to possible sanctions by the Group of Seven nations on Russian oil, and extended losses as banks persistently bought dollars to cover their existing short dollar bets ahead of front-month currency futures and options contract expiry, dealers said.


The contracts shall expire at 1230 IST on the expiry day.


Market participants said close to $6 bln of open interest outstanding was in the front-month, Jun 28 futures contract on the National Stock Exchange and BSE.


Hence, traders are rushing to buy dollars ahead of futures contract expiry to avoid any slippage on arbitrage, dealers said.  End


IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Written by Richard Fargose

Edited by Michael Correya


For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.


Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


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Source: Cogencis

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