The Standard Chartered Bank has struck an on-shore foreign currency option transaction with Reliance Industries Ltd for $30 million, allowing RIL to hedge its dollar exposure.

The deal, executed with RIL for $30 million has a tenor of six months, the Standard Chartered Bank said in a release in Mumbai on Monday.

Such deals involve taking a cover for changes in the value of foreign currency against the Indian rupee.

The client buys a "USD put INR call" option to hedge the risk on the downside and gives up some potential gains by selling a "USD call INR put" option to obtain a zero cost combination, the release said.

This specific structure was suitable to exporters, who need to sell forward dollars and hold a view that INR would appreciate against dollar in the next six months, the release added.

The foreign currency option would provide onshore customers with genuine foreign currency exposures, greater hedging flexibility as compared to the forward cover, it said.

As part of developing the derivative market in India, the Reserve Bank of India has permitted foreign currency-rupee options with effect from Monday.