India's central bank asks exporters to sell 50 pc of forex earnings

Mumbai, May 10 (PTI) In order to arrest the declining value of the rupee, the Reserve Bank of India (RBI) today asked exporters to sell 50 per cent of their retained foreign exchange earning. The country's central bank has also fixed limit for intra-day trading of foreign currency by banks. "On a review of the scheme, it has been decided that 50 per cent of the balances in the Exchange Earners' Foreign Currency Account (EEFC) accounts should be converted forthwith into rupee balances and credited to the rupee accounts as per the directions of the account holder," RBI said in a notification. In respect of all future forex earnings, an exchange earner is eligible to retain 50 per cent (as against the previous limit of 100 per cent) in non-interest bearing EEFC accounts, it said. The balance 50 per cent shall be surrendered for conversion to rupee balances, it added. As per the existing rules, an exporter is allowed to retain 100 per cent of their earning in foreign currency. EEFC is an account maintained in foreign currency with a bank. It is a facility provided to the foreign exchange earners, including exporters, to credit 100 per cent of their foreign exchange earnings to the account. The account holders do not have to convert foreign exchange into Rupees and vice versa, thereby minimising the transaction costs. "The move will definitely prop the rupee which is very visible today. With this, the RBI is clearly indicating that it does not want to sell the dollar to support the local unit but it prefers policy level actions," India Forex Advisors chief executive Abhishek Goenka said. The step is expected to release at least USD 2.5 billion into the system out of the USD 5 billion with the exchange earners' forex account, Goenka said. Meanwhile, in a separate notification, RBI said it has been decided to fix the intra-day open position, or daylight limit of the banks, at 5 times the net overnight open position limit available to them or the existing intra-day open position limit as approved by the RBI, whichever is higher, for positions involving Rupee as one of the currencies. PTI