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FCNR(B) interest bill to keep dollar hedging costs high

As a multibillion-dollar FCNR(B) interest bill escalates, Indian banks grapple with increased dollar hedging expenses. Recently, the Reserve Bank of India mandated new reserve prerequisites for forex…

  • Multibillion-dollar FCNR(B) interest bills to maintain high dollar hedging costs.
  • RBI's reserve requirement on forex derivatives adds to banks' currency risk.
  • Approximately $4 billion annual dollar exposure remains unhedged for Indian banks.

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