To be fair, the Indian corporate sector has very few avenues and instruments to protect itself from risk on the Rupee - Dollar exchange rate.

The Forward Contract is the one and only instrument available for the purpose - there are no INR - USD Options or Currency Swaps or Interest Rate Swaps. The forward market too, is liquid only upto 6 months forward. The number of deals with tenors upto 12 months is increasing, but the market is still not fully developed or liquid.

With the RBI taking steps to develop and energise the debt market; with local interest in debt growing once again in the aftermath of the stock market collapse in 1995; and relaxation in RBI rules regarding foreign debt, it is hoped that over the next two years the stage will be set for introduction of INR - USD Derivatives. In context : Sodhani Committee's Debt Market reforms and recent ECB guidelines.

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