Standard Chartered Bank is looking to become the first bank to offer over-the-counter options on the Indian rupee. "We want to be the pioneer in bringing rupee options to India," said Madhav Shankar, manager of derivative products in Mumbai. He believes there is strong corporate interest in using currency options to hedge U.S. dollar exposure, declining to name companies it has approached. StanChart plans to approach the Reserve Bank of India for approval, Shankar said, declining to put a timeframe on the move.
One rival poured cold water on StanChart's plans. Arun Ghurana, head of derivatives marketing at ABN AMRO in Mumbai, said rupee options are part of the firm's long-term plans, but added that banks don't expect approval coming from the RBI for some time.
Usha Thorat, chief general manager, debt management at the RBI in Mumbai, was unable to say when options might be permitted. "We're waiting for the other markets to develop first," she said. If the RBI were approached by an entity wishing to use rupee options, the central bank would require the entity meet capital adequacy requirements and would also want to see a methodology for pricing, she continued. At the present, the bank is watching the development of currency forwards and interest-rate swaps.
