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The RBI Reference Rate is also known as the RBI Exchange Rate, RBI FOREX Rate and RBI Rate. In the section below, click on USD, GBP, EUR or JPY to get the RBI Reference Rate for these currencies. About RBI Reference Rate The Reserve Bank of India (RBI) Reference Rate is the exchange rate of the Indian Rupee (INR) against major foreign currencies. The Reference Rate is computed and published daily by the RBI for the Indian Rupee against four major foreign currencies – the US Dollar (USD), Euro (EUR), British Pound (GBP) and Japanese Yen (JPY).
RBI reference rate and currency exchange rate in India
What is RBI reference rate?
RBI reference rate is the rate of foreign currencies with reference to Indian rupee. The Reserve Bank of India collects and brings out these reference currency rates on a daily basis for four major currencies of the world. It includes American dollar (USD), British pound (GBP), Japanese yen (YEN) and European zone currency Euro (EUR).
The RBI calculated these exchange rate for various foreign currency which is valid for transactions across the country on certain pre-specified parameters.
How is currency reference rate calculated by RBI?
The RBI used to publish the reference exchange rates till August 2014, by calculating the mean of the bid and offer rates polled from a few select banks. The banks were selected randomly. For this RBI identifies banks on the basis of their standing, market-share in the domestic foreign exchange market and few other representative characters.
Also, rates were randomly chosen from the five-minute window between 11.45 a.m. and 12.15 p.m. on every weekday. The weekdays exclude Saturdays, Sundays and bank holidays in Mumbai.
But from September 2014 onwards, the following changes were made for calculating reference rates -
The rate for spot US Dollar against Indian Rupee was continued to be calculated on previous method.
Rates for EUR-INR, GBP-INR and JPY-INR will be computed by the USD-INR reference rate with that of EUR-USD, GBP-USD and USD-JPY rates.
RBI reference rate started to be published around 1.30 p.m. on every working day.
These changes in the methodology of calculation of RBI reference rates was incorporated on the recommendations of the Committee on Financial Benchmarks, which submitted its report in February 2014.
Further the Reserve Bank periodically reviews the methodology for selecting banks and polling thereafter to ensure that the reference rate truly reflect the market activity.
Where are RBI currency exchange rate used?
The exchange rates published by RBI is primarily use for the following –
For the settlement of NSE, MCXSX etc. exchange traded currency futures and options.
Used by many corporates for determining transfer pricing. The transfer pricing in India is governed by Income Tax Department of Government of India.
All foreign exchange transactions of GOI by RBI is based on these reference rates.
The RBI’s foreign currency assets and liabilities are revalued using it.
The revaluation of Special Drawing Rights (SDRs) by the International Monetary Fund (IMF) is also being done using these rates.
What is FEDAI and what is its role in reference rate fixing?
FEDAI stands for Foreign Exchange Dealers Association of India. It was established in 1958 as an Association of banks dealing in foreign exchange. These banks were known as authorized dealers or Ad’s. FEDAI is a self-regulatory body and is incorporated under Section 25 of The Companies Act, 1956.
The major activities include –
Framing of rules that governs the conduct of inter-bank foreign exchange
Liaison with RBI for reforms and development of forex market.
Publishing spot fixing rates for USD, GBP, EUR and JPY against INR.
Revaluation rates publishing for spot contracts against Indian rupees in 25 currencies.
Forward contracts rate publishing against Indian rupee up to 6 months in nine currencies and up to 12 months in four currencies
Where to find information about exchange rates?
The RBI reference rates fixed for any working day is published on the RBI website (link). This link also contains reference rate archive containing historical data.
The RBI reference exchange rate is different from the rates of the future rates (link) on the stock exchanges or over the counter segments.