The Economic Times

RBIs sell-buy swaps slow rupees fall but push up forward premiums, making hedging costlier for foreign investors

The Reserve Bank of India is engaged in dollar sell-buy swaps to stabilize the rupee's value. However, this has resulted in higher forward premiums, making it expensive for foreign investors to hedge. As a consequence, some foreign investments in rupee-denominated assets may decline. Additionally, companies are opting to borrow in rupees and exchange for dollars due to favorable local rates.