Banking sector reforms have been sequenced to correspond with changing regulations of the foreign exchange market. The government has allowed the exchange rate to gradually float (as opposed to a “crawling” peg), and full current account convertibility has been introduced, with de facto capital account convertibility for nonresidents, and calibrated liberalization for residents. Other recent measures include foreign participation in the Indian foreign exchange market, unlimited hedging of genuine foreign exchange risk, and the introduction of new instruments such as interest rate and currency swaps, options, and forward contracts. Capital Market Reforms Significant effort has similarly.
