<p>New Delhi: The <a href="https://www.deccanherald.com/tags/indian-rupee#:~:text=Rupee%20falls%204%20paise%20to%20close%20at%2085.52%20against%20US%20dollar,-30%20December%202024">Indian rupee</a>, which has depreciated sharply hitting a record low of 86.64 against a US dollar last week, is likely to make a strong comeback once the euphoria over Donald Trump’s assuming the US presidency settles, SBI Research said on Monday.</p>.<p>“Dollar Index might have some run off left. However, like in 2016-17, a strong currency bounce back for rupee is clearly apparent once the dust settles down,” it said.</p>.<p>The US dollar has strengthened sharply against major global currencies including the Indian rupee, in the run-up to Donald Trump’s oath-taking ceremony on January 20.</p>.Big banks quit climate change groups before Donald Trump’s term.<p>Dollar Index may have run off left due to a confluence of factors, most notably the reversal of flows to the US and the guardianship of ‘Big Tech’ that have endorsed president-elect Donald Trump’s Make America Great Again (MAGA) rhetoric, SBI Research said in a note.</p>.<p> The Reserve Bank of India (RBI) has tried to stabilise the Indian currency through active interventions in the foreign exchange markets.</p>.<p>“As a corollary to intervention in the fx (foreign exchange) markets juxtaposed with volatile movements in Government cash balances, liquidity has been shrinking in the banking system and alarmingly blowing past comfort zone,” the research note authored by SBI Group Chief Economic Adviser Soumya Kanti Ghosh said.</p>.<p>This persistent liquidity conundrum, along with anticipation of a rally in dollar index has prompted the regulator to revert to daily dynamic VRR (variable rate repo) to effectively manage the liquidity along the revised LMF (Liquidity Management Framework) in place from February 2020.</p>.<p>As per the SBI Research report, the RBI is likely to introduce longer-term buy-sell swaps, spanning two to three years, that would bolster foreign exchange reserves and release liquidity into the system.</p>.<p>The report further noted that the system liquidity situation remained tight and turned to “injection mode” since December 16, 2024, due to many reasons like tax outflows, GST payment, forex market intervention and volatility in capital flows.</p>.<p>System liquidity or readily available cash with banks, moved from a surplus of Rs 1.35 lakh crore in November to a deficit of Rs 0.65 lakh crore in December. The deficit widened to Rs 1.58 lakh crore till January 16.</p>.<p>To ease the liquidity pressure, RBI has injected Rs 11.5 lakh crore to the banking system via variable rate repo (VRR) operations of 1-7 days maturity during December 16, 2024, to January 15, 2025. “However, the liquidity pressure did not ease,” the report noted.</p>.<p>“Market is sensing that the new RBI regime is responding positively to the long-standing demands regarding liquidity and is hopeful of more measures that address both system liquidity and durable liquidity,” it said.</p>
<p>New Delhi: The <a href="https://www.deccanherald.com/tags/indian-rupee#:~:text=Rupee%20falls%204%20paise%20to%20close%20at%2085.52%20against%20US%20dollar,-30%20December%202024">Indian rupee</a>, which has depreciated sharply hitting a record low of 86.64 against a US dollar last week, is likely to make a strong comeback once the euphoria over Donald Trump’s assuming the US presidency settles, SBI Research said on Monday.</p>.<p>“Dollar Index might have some run off left. However, like in 2016-17, a strong currency bounce back for rupee is clearly apparent once the dust settles down,” it said.</p>.<p>The US dollar has strengthened sharply against major global currencies including the Indian rupee, in the run-up to Donald Trump’s oath-taking ceremony on January 20.</p>.Big banks quit climate change groups before Donald Trump’s term.<p>Dollar Index may have run off left due to a confluence of factors, most notably the reversal of flows to the US and the guardianship of ‘Big Tech’ that have endorsed president-elect Donald Trump’s Make America Great Again (MAGA) rhetoric, SBI Research said in a note.</p>.<p> The Reserve Bank of India (RBI) has tried to stabilise the Indian currency through active interventions in the foreign exchange markets.</p>.<p>“As a corollary to intervention in the fx (foreign exchange) markets juxtaposed with volatile movements in Government cash balances, liquidity has been shrinking in the banking system and alarmingly blowing past comfort zone,” the research note authored by SBI Group Chief Economic Adviser Soumya Kanti Ghosh said.</p>.<p>This persistent liquidity conundrum, along with anticipation of a rally in dollar index has prompted the regulator to revert to daily dynamic VRR (variable rate repo) to effectively manage the liquidity along the revised LMF (Liquidity Management Framework) in place from February 2020.</p>.<p>As per the SBI Research report, the RBI is likely to introduce longer-term buy-sell swaps, spanning two to three years, that would bolster foreign exchange reserves and release liquidity into the system.</p>.<p>The report further noted that the system liquidity situation remained tight and turned to “injection mode” since December 16, 2024, due to many reasons like tax outflows, GST payment, forex market intervention and volatility in capital flows.</p>.<p>System liquidity or readily available cash with banks, moved from a surplus of Rs 1.35 lakh crore in November to a deficit of Rs 0.65 lakh crore in December. The deficit widened to Rs 1.58 lakh crore till January 16.</p>.<p>To ease the liquidity pressure, RBI has injected Rs 11.5 lakh crore to the banking system via variable rate repo (VRR) operations of 1-7 days maturity during December 16, 2024, to January 15, 2025. “However, the liquidity pressure did not ease,” the report noted.</p>.<p>“Market is sensing that the new RBI regime is responding positively to the long-standing demands regarding liquidity and is hopeful of more measures that address both system liquidity and durable liquidity,” it said.</p>