London overtakes Mumbai in rupee trading

This is adding to a sense of urgency among India authorities to deepen the onshore market
Newsfeed19 Sep 2019
Photo credit: AFP Photo

Market news selected by the DBS Chief Investment Office


London has overtaken India’s financial capital Mumbai to become the top centre for trading the nation’s currency. That is adding to a sense of urgency among local authorities to deepen the onshore market.

Average daily volumes for rupee in the UK soared to USD46.8b in April, a more than fivefold jump from USD8.8b in 2016, according to the latest survey from the Bank for International Settlements (BIS) released this week (ending 20 September). That exceeded the USD34.5b recorded in India.

Trading in dollar-rupee offshore non-deliverable forwards increased threefold over the three-year period, the BIS report showed. Alive to the growing size of the offshore rupee market, India’s government and the central bank have been looking at ways to improve access for overseas investors and offer them more products to ramp up volumes at home.

Rupee trading – including spot, outright forwards, foreign-exchange swaps, and other products – also jumped in Singapore, Hong Kong, and the US over the three-year period, according to BIS. Data from a Bank of England study corroborates the trend.

A panel appointed by the Reserve Bank of India (RBI) last month proposed extending onshore currency trading hours, allowing banks to offer pricing to non-residents at all times, and allow trading of non-deliverable forwards in the rupee among steps to deepen trading onshore.

Other Asian economies have made similar efforts. In 2018, Bank Indonesia established the domestic non-deliverable market for the rupiah, though the nation has not been able to take back significant business, the RBI report noted. – Bloomberg News.

The US Dollar Index (DXY) rebounded 0.31% to 98.561 on Wednesday (18 September), the euro lost 0.39% to USD1.1030, the pound shed 0.22% to USD1.2472, and the yen weakened 0.30% to 108.45 per dollar.


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