A Reserve Bank of India (RBI) panel on Friday said the country should introduce currency futures to boost the range of financial instruments available for companies and investors to guard against exchange-rate fluctuations, and to open up currency trading to a larger base of investors.
Officials in the finance ministry said this could help policymakers manage the consequences of a sharp, 12.5% appreciation of the rupee against the dollar this year.
The officials, who did not want to be identified, said that the broad aim of introducing currency futures was to allow a large number of small exporters to easily hedge their anticipated earnings and create conditions for more two-way movement of the rupee.
For all of 2007, the rupee has moved in only one direction against the dollar, up.
Indias foreign exchange reserves rose to $270 billion on 9 November. The rupee hit a near-decade high of 39.16 to the dollar last week. It closed trading at 39.33 on Friday.