MUMBAI, Nov 26 (Reuters) - India’s central bank on Monday partially eased a requirement for companies to hedge dollars while raising funds from overseas markets - a move that will encourage companies to raise funds offshore and reduce demand for dollars in the domestic market.
The Reserve Bank of India said companies would now be required to hedge 70 percent of their external commercial borrowings (ECB) for maturity periods of three to five years, instead of the full exposure.
The move should help to support the rupee, which has fallen nearly 10 percent against the dollar since the beginning of the year, by attracting dollar inflows.
In a similar move last month, India allowed state oil marketing firms to raise $10 billion in overseas loans without hedging the dollars. (Reporting by Abhirup Roy and Suvashree Dey Choudhury; Editing by Kevin Liffey)