Eliminating currency risk for borrowers planning to raise foreign currency funds has turned a tad easier.

The Reserve Bank of India has allowed greater flexibility for them in hedging offshore exposure by way of permitting residents to re-book any swap or derivative contract.

"It has been decided that in cases where the underlying is still surviving, the client, on cancellation of the swap contract, may be permitted to re-enter into a fresh FCY (foreign currency)-INR Indian rupee) swap to hedge the underlying," RBI said in a notification on Friday.

But RBI cautioned, one can do so only after the expiry of the tenor of the original swap contract that had been cancelled. All other operational guidelines for FCY-INR swaps remain unchanged.

The measure may be aimed at dissuading people from keeping unhedged positions especially at a time when most world currencies are facing rout against the greenback.

In the last few months, the rupee has been fairly stable against the US dollar compared to other major currencies. Thanks to rising optimism over India's improving macro parameters like gross domestic product growth, falling retail inflation and contracting fiscal deficit.

This has led to some amount complacency among corporates who may be staying away from hedging to save costs. (Economic Times)