‘Trading in rupees’: Trading in rupee trading suspended for one day
Trading in Indian rupees for a limited time has been suspended in the wake of the demonetisation move.
The move, which has prompted panic selling in the Indian currency, has prompted the government to impose a cash crunch in the country, with markets expected to fall in response.
The government has decided to keep traders away from trading in the currency until January 15, as it attempts to reduce the impact of demonetization.
“All transactions will be suspended on the first day of January 15,” the official spokesperson for the finance ministry, Ravi Shankar Prasad, said on Tuesday.
According to the statement, the suspension will begin at 11 am on January 15 and will be followed by a 90-day period in which traders will have to wait for the RBI to set up a formal clearing mechanism for their transactions.
The decision to suspend trading in rupes came a day after the finance minister, Arun Jaitley, said in a statement that traders in the foreign currency would be allowed to sell their rupees as long as they do not use the same currency for transactions in rupe.
While traders will be allowed a 90 day window to sell rupees, the decision will only be applicable for purchases and sales of foreign currency.
The government has also decided to stop the sale of foreign currencies and buy them in the rupee.
“Foreign currency will be converted into the rupe,” the statement said.
Rising prices have been the key factor in the rise in the demand for the currency.
According to the Reserve Bank of India (RBI), the rupees have been falling in value in recent months, as investors rushed to buy the currency in anticipation of the move to end the cash crunch.
The currency has fallen by about 20% since the end of November, to around 65.30 rupees per US dollar.
It has risen by about 15% since January, to 63.10 rupees.
According the RBI, the rupphas fallen by almost 60% against the dollar in the last two months.
In the first quarter of 2019, it fell by more than 40% against US dollars.