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RBI Reference Exchange Rate

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RBI reference exchange rate refers to the benchmark foreign exchange rates for Indian Rupee against major four foreign currencies, published by Reserve Bank of India on a daily basis.

The Reserve Bank of India compiles and publishes on a daily basis, reference rates for four major currencies i.e. US dollar (USD), British Pound (GBP), Japanese Yen (YEN) and Euro (EUR).

Uptill September 2014, the rates were arrived at by averaging the mean of the bid/ offer rates polled from a few select banks at a randomly chosen five minute window between 11.45 a.m. and 12.15 p.m. every week-day (excluding Saturdays, Sundays and Bank Holidays in Mumbai). The contributing banks were randomly selected from a large panel of banks, identified on the basis of their standing, market-share in the domestic foreign exchange market and representative character[1].

Based on the recommendations of the Committee on Financial Benchmarks (constituted on June 28, 2013; Chairman: Shri P. Vijaya Bhaskar; report submitted in February 2014) the following changes were made to the existing methodology for calculation of exchange rates.

These changes have come into effective from September 1, 2014.

The RBI reference exchange rate may be different from the rates established through the currency trading venues of stock exchanges or over the counter segments. However, the direction of movement would be the same.

For instance, Foreign Exchange Dealers Association of India (FEDAI)[2] used to publish spot fixing rates for USD, GBP, EUR and JPY against INR at 11:40 AM - 12 noon on every working day based on quotes collected through polling. The FEDAI spot fixings were used for cash settlement of exercise of over the counter foreign currency- Indian rupee options primarily by some corporates. FEDAI also publishes revaluation rates for spot contracts (against INR) in 25 currencies and for forward contracts (against INR) upto 6 months in nine currencies and upto 12 months in four currencies. The banks use the FEDAI revaluation rates for marking to market[3] the outstanding spot and forward contracts in their books.

The RBI Reference Rates are used for settlement of exchange traded currency futures and options. The Reference Rate is reportedly used by many corporates for determining transfer pricing. The foreign exchange transactions of Government of India undertaken through RBI take place at the Reference Rate. The RBI’s foreign currency assets and liabilities are revalued at weekly and monthly intervals using the Reference Rate. The International Monetary Fund (IMF) also uses the rate for revaluation of Special Drawing Rights (SDRs).

The RBI reference rates fixed for the day may be seenhere. Historical data may be seen from RBI database.

Concerns are often raised as to whether RBI being the regulator of the Indian foreign exchange market should be involved in fixation of Reference Rates. However, across the globe, many central banks like European Central Bank, Bank of Canada, Central banks of countries like Brazil, South Africa, Thailand, Indonesia etc. publish such reference rates. Further in view of the scandals relating to manipulation of major global foreign exchange benchmarks administered by private sector entities, as also the fact that the Reference Rate setting process has remained quite robust, the Committee on Financial Benchmarks recommended that it may not be appropriate for RBI to discontinue fixing the Reference Rates.

The Committee also felt that the USD/INR Reference Rate of RBI should be derived based on the actual market transactions obtained from defined source/s covering a sufficiently longer time window so as to ensure that the Reference Rate appropriately represents the prevailing spot rate. The Reference Rate was also recommended to be volume weighted to smoothen the impact of small value off-market transactions in determination of the benchmark. The sources of the EUR/USD, GBP/USD and JPY/USD rates used for crossing the USD/INR Reference Rate was also recommended to be publicly disclosed.

The Reserve Bank periodically reviews the procedure for selecting the banks and the methodology of polling so as to ensure that the reference rate is a true reflection of the market activity.

Since the timing of publication of the FEDAI spot rates and RBI reference rates were almost the same, Committee on Financial Benchmarks (Page No.71), had advised FEDAI to decide on phasing out the benchmark of Spot Fixing Rate at 11.30 a.m. after conducting a survey among banks. Accordingly, vide its circular dated June 2014, FEDAI decided to discontinue publishing daily FEDAI Spot Fixing Rates at 11.30 a.m. with effect from 1 October 2014. It does not mean that RBI reference rate would be mandated as an alternate reference rate. The settlement may be done at the ruling market rate.


1. The reference rate computation process was reviewed and changed with effect from April 15, 2010. In the changed procedure, the number of banks in the polling panel was significantly expanded, of which a set of banks are selected randomly every day for calling for quotes. Further, the reference time window was expanded to 30 minutes, i.e. 11:45 AM to 12:15 PM from the earlier system of 15 minutes, of which a five minute window is selected randomly for conducting poll. The means of the polled bids and offers are calculated for each contributing bank and the outlier mean rates are removed. The Reference Rates are arrived at by averaging the remaining mean rates.

2.Foreign Exchange Dealer's Association of India (FEDAI) was set up in 1958 as an Association of banks dealing in foreign exchange in India (typically called Authorised Dealers - ADs) as a self regulatory body and is incorporated under Section 25 of The Companies Act, 1956. It's major activities include framing of rules governing the conduct of inter-bank foreign exchange business among banks vis-à-vis public and liaison with RBI for reforms and development of forex market.

3. Valuing the security in terms of its market value rather than the book value

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