P). Exchange control does not altogether prohibit Indian banks keeping open positions during the course of a day.
1). Indeed, unless they are willing to take open positions, they will cease to be market-makers.
2). For market-makers offering two-way quotes in the international markets, open positions are far more common.
3). Thus, depending on the policy of a bank, dealers may be allowed to take intra-day positions in order to make profit.
4). For instance, a dealer expecting the dollar to weaken during the day might deliberately create, through customer transactions and transaction in the inter-bank market, an oversold position in the hope of squaring it later during a day at a profit, should his expectation about the dollar weakening materialise.
Q). Large overbought or oversold positions are often deliberately built up in the hope of profiting from price movements.
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