‘If policy status quo remains, quo remains, Rupee may hit 75

Aug 30 2013, 05:05 IST
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SummaryThe 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 on Thursday.

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 on Thursday.

According to the global financial services firm, the collapse of rupee is likely “overdone”, but "Expectations are racing to R70 a dollar (and now, even R75).” If 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. Rupee on Wednesday hit lifetime low of 68.85 and closed at 68.80, biggest single-day loss of 256 paise, as global oil prices jumped.

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