AAll
Authorized Dealers
In Foreign Exchange,
Dear
Sirs,
FORWARD
COVER
Please refer
to F.E. Circular No. 33 dated the 28th
March, 1994 on the above subject.
2. In terms
of para
8 of the Chapter on forward cover attached to the said
F.E. Circular, in case an exporter books forward against
an export contract, but draws a usance bill and presents
it for discounting, the bank may discount the will at the
rates published by the Foreign Exchange Rates Committee
which are based on the spot rates minus the discount. The
foreign currency receipts in respect of such discounted
bills are not considered deliveries against forward contracts
but the contracts are required to be closed out on maturity.
3. In order
to provide the exporters the benefit of forward bookings,
it has been decided that with effect from 26th
May, 1994, Authorized Dealers may treat discounting of usance
bills as delivery against the relative forward contract
provided such bills are presented for discounting during
the option delivery period only. The discount rate in such
cases will be the forward rate of the contract less the
usance period discount as prescribed for bill buying rate
by the Foreign Exchange Rates Committee. With the discounting
of the bill, the relative forward cover contract shall be
deemed to have been taken up.
