I read an article last week. It said the Reserve Bank of India (RBI) is moving forward with its strategy to develop a new reference. It is to substitute the London Interbank Offered Rate (LIBOR) called the Mumbai Interbank Forward Outright Rate (MIFOR). Now you know the MIFOR full form.
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A standard rate used by the commercial banks of India for specific financial agreements is referred to as the Mumbai Interbank Forward Offer Rate (MIFOR). Rates for contracts and forward-rate arrangements are set using MIFOR. A forward charge earned from Indian foreign exchange markets is combined with the London Interbank Offered Rate (LIBOR). The central bank of India gave notice in mid-2021 urging all national banks to discontinue using MIFOR for new deals by the end of the year. It is in consideration of the strategy to systematically roll out LIBOR. Now you know what is MIFOR.
What are the characteristics of the MIFOR?
Indian banks use the Mumbai Interbank Forward Offer Rate as a standard for pricing forward-rate contracts and securities.
MIFOR combines a forward premium earned from Indian forex markets with the London Interbank Offered Rates.
After the rate-fixing incident concerning the reference rate, LIBOR, the Reserve Bank of India stopped using MIFOR.
Daily publications of modified and updated MIFOR rates are made by Financial Benchmarks India Pvt. Ltd.
The only difference between MIFOR and MIBOR (India's interbank rate) is that MIFOR includes a component for currency conversion.
What is the MIFOR rate?
When determining the swap points, MIFOR does not merely use the interest rate difference between the United States and India for the given maturity. Let's assume, for reference purposes, that the three-month U.S. rate is 6% and the three-month India rate is 8%. The interest rate difference would be 2%, but MIFOR increases that difference by a risk premium. It changes depending on the banks that provide the interbank pricing.
This is all about the MIFOR full form.
Read More: What is the LIBOR rate? What is SOFR? What is replacing LIBOR? What is LIBOR transition?Your Feedback Matters! How was this Answer?
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What is MIFOR?
Shikhar
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2022-09-22T20:03:29+00:00 2022-09-22T20:03:31+00:00Comment
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