However, this concern can be negated practically by rolling over a short-term (say one year) contract till the maturity of the exposure which basically replaces the volatility risk of the spot exchange rate with the volatility risk of forward premia which is confined to a far narrower range. 13.
The liquidity took a slight beating from December last year when we imposed certain restrictions on the markets to curb the volatility that we witnessed. More on it later, but it was heartening to see the turnover pick up again in recent months despite the fact that the restrictions continue to be in place. Flexibility in cancellation/rebooking/roll-over for genuine transactions 14.