The basic principle for accessing domestic foreign exchange markets is hedging of underlying foreign exchange exposures. In keeping with the evolution of the foreign exchange market and the increase in depth and volumes, a range of hedging instruments have been permitted to market participants including foreign exchange forwards, swaps and options, but mainly against crystallised foreign currency exposures.
However, it has now been decided to expand the range of hedging tools available to the market participants as also to facilitate dynamic hedging by the residents in respect of other economic exposures. This will include hedging of price risk faced by domestic producers of nonferrous metals, users of aviation turbine fuel, and others facing similar systemic international price risk.