Press Esc to close
Monday 25 May 2015
News updated at 10:43 PM IST
Weather
Max: 33.3°C
Min : 22.5°C
In Bengaluru
Sunny day

If policy status quo remains,rupee could touch 75/USD: BofA-ML

New Delhi, Aug 29 , 2013 (PTI)

The Reserve Bank of India (RBI) will have to take far more pro-active steps to rebuild forex reserves, because if the status quo remains, rupee could touch 75 per US dollar by the end of 2014, Bank of America Merrill Lynch said in a report today.

According to the global financial services firm, the collapse of rupee is likely "overdone" but that said "INR expectations are racing to Rs 70/USD (and now, even Rs 75/USD)."
If the status quo remains, BofA-ML said  "a conservative estimate is USD/INR goes to 70 year-end and 75 by-end 2014 based on NDF forward pricing."

NDF deals are forward transactions settled in dollars because the rupee, being a non-convertible currency, cannot be 'delivered' outside India.

The rupee yesterday had collapsed to a lifetime low of 68.85 against the dollar and closed at 68.80, registering its biggest single-day loss of 256 paise, as global oil prices jumped, deepening concerns about the current account deficit and capital outflows.

The rupee today however, recovered from its all-time low by rising 170 paise to 67.10 against the dollar in early trade on fresh selling of the US currency by exporters and banks amid fresh measures announced by the RBI to check free-fall of the currency.

RBI yesterday opened a special window to help the three state-owned oil marketing companies needing about USD 8.5 billion every month meet their daily foreign exchange requirement in a bid to check the rupee's free fall.

"We welcome yesterday's initiatives to provide RBI swaps to fund oil imports and seek swap lines against trade arrangements as short-term relief. Yet, to stabilise INR expectations, we believe that the Reserve Bank of India (RBI) will have to take far more pro-active steps to rebuild FX reserves," the report said.

The RBI should launch a scheme to attract significant forex inflows where the INR risk would be borne by the RBI to comfort investor confidence like issue of NRI or sovereign bonds or reviving FCNRA deposits.

"We ourselves estimate that the RBI would be hard pressed to sell USD 25 billion, and every US Dollar sold will likely only raise further questions about the adequacy of forex reserves," the report noted.


Go to Top

Photo Gallery
Prime Minister Narendra Modi greets to crowd as actress and BJP MP Hema Malini and other leaders ...

Prime Minister Narendra Modi greets to crowd as actress and BJP MP Hema Malini and other leaders ...

Mumbai India and CSK Cricketers with IPL Trophy during photo session ahead of their IPL 2015...

Mumbai India and CSK Cricketers with IPL Trophy during photo session ahead of their IPL 2015...

Organically grown fruits and vegetables at ‘Pilikula Vasanthothsava’ at Pilikula in Mangaluru...

Organically grown fruits and vegetables at ‘Pilikula Vasanthothsava’ at Pilikula in Mangaluru...

Dr.Rajkumar's Statue Unveil at Gayathri (Rajaji) Nagar...

Dr.Rajkumar's Statue Unveil at Gayathri (Rajaji) Nagar...

An Indian man pours water on his face during a hot summer day in Hyderabad...

An Indian man pours water on his face during a hot summer day in Hyderabad...

A picture of late Pope's John Paul II is seen inside the Force India's Formula One car...

A picture of late Pope's John Paul II is seen inside the Force India's Formula One car...

Children seen carrying sand in cycle cart which collected from the road at Mysuru...

Children seen carrying sand in cycle cart which collected from the road at Mysuru...

A man shows a pair of turtles in Thane, Mumbai ...

A man shows a pair of turtles in Thane, Mumbai ...

A salesman helps a customer to select gold bangles at a jewelry showroom in Mumbai...

A salesman helps a customer to select gold bangles at a jewelry showroom in Mumbai...

A pair of Barbet bird sits on a tree in New Delhi on Sunday...

A pair of Barbet bird sits on a tree in New Delhi on Sunday...

Copyright 2014, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523