2012.05.10 06:31:06 MARKET TALK: USD/INR Sharply Down; Conversion Of Exchange Earnings

0431 GMT [Dow Jones] The USD/INR falls sharply, trading at 53.44 vs 53.82 late Wednesday in Asia after the Reserve Bank of India says exchange earners must convert 50% of their foreign currency balances in their accounts into INR balances within a fortnight. The Earners' Foreign Currency Account, or EEFC, is an account maintained in foreign currency with authorised dealers. It enables foreign exchange earners, including exporters, to credit 100% of their foreign exchange earnings to the account, so that they don't have to convert foreign exchange into INR and vice versa, which reduces transaction costs. The pair fell sharply to a low of 52.94 post-RBI rules. The central bank said exporters won't be allowed to buy foreign exchange unless EEFC accounts are fully utilized. "The market was long on dollars because fundamentals are adverse to the rupee," a trader says. "This, and setting limits on banks intraday open positions" could support the local currency, he adds. (khushita.vasant@dowjones.com) Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com (END) Dow Jones Newswires May 10, 2012 00:31 ET (04:31 GMT)