Explanation:

ETCD is financial instrument that trades on regulated exchange, and whose value is based on value of another asset. These derivatives are traded in a regulated fashion. They can be used to hedge exposure or speculate on wide range of financial assets like commodities, currencies, equities and even interest rates. RBI recently raised exposure limit under exchange traded currency derivatives (ETCD) trading for residents and foreign portfolio investors (FPIs) to $100 million across all currency pairs involving Indian rupee. This decision aims to help entities engaged in forex transactions to maintain their currency risks in better manner. Earlier, the limit was of $15 million for US Dollar-Rupee and $5 million for other currency pairs of Indian rupee with Japanese Yen, Euro and British Pound. The raised exposure limit permits persons resident in India and FPIs to take positions (long or short), without having to establish existence of underlying exposure, up to single limit of $100 million equivalent across all currency pairs involving Indian rupees, put together, and combined across all exchanges.