Raghuram Rajan move may mobilise $10 bn from abroad, aid Indian rupee, says experts

Comments 0
Raghuram G Rajan reckons he has too many hurdles ahead but appears determined to take on the challenge to streamline the economy hit  by rupee downfall, inflation and slow growth. The 50-year-old economist exuded confidence and promised reforms,  after the eventful first day in the office (RBI). He  took the charge from D.Subbarao at Reserve Bank of India head quarters (RBI) on Wednesday. Express photo by Pradip Das, Mumbai. Raghuram G Rajan reckons he has too many hurdles ahead but appears determined to take on the challenge to streamline the economy hit by rupee downfall, inflation and slow growth. The 50-year-old economist exuded confidence and promised reforms, after the eventful first day in the office (RBI). He took the charge from D.Subbarao at Reserve Bank of India head quarters (RBI) on Wednesday. Express photo by Pradip Das, Mumbai.
SummaryMove would help in shifting rupee risks away from NRIs at a time of extreme volatility: BofA-ML.

The Reserve Bank of India's (RBI) move, announced by new Governor Raghuram Rajan, to allow a special window to swap foreign currency non-resident (FCNR) dollar funds for boosting foreign fund inflows is likely to fetch around USD 10 billion, say experts. The newly-appointed Governor Raghuram Rajan had said yesterday that RBI will offer a window to banks to swap the fresh FCNR-B dollar funds, mobilised for a minimum tenor of three years and over, at a fixed rate of 3.5 per cent per annum.

NRI deposits: RBI to subsidise banks

According to Bank of America Merrill Lynch (BofA-ML), "the move (FCNR-B) should fetch USD 8-10 billion", adding that the move would help in shifting Indian rupee risks away from non-resident Indians (NRIs) at a time of extreme volatility.

Echoing sentiments, Morgan Stanley said the "measures announced by RBI are somewhat similar in nature and can help augment capital inflows and cushion the funding pressures to some extent in the near term."

Raghuram Rajan says RBI governorship not meant to win Facebook 'likes'

The Indian rupee, which had touched an all-time intra-day low of 68.85 to a dollar on August 28, today strengthened by hefty 138 paise to trade at 65.69 against the dollar at the Interbank Foreign Exchange market after fresh measures by the RBI to stem the currency's slide.

BofA-ML further said the FCNRB deposit-cum-swap facility is expected to stabilise Indian rupee in absence of a major FX shock.

Earlier, similar schemes like the 1998 Resurgent India Bonds and the 2001 India Millennium Deposits, each of which had raised USD 5 billion, had been extremely effective in this regard, it added.

Morgan Stanley noted that significant currency pressures bring a need to raise NRI dollar deposits through a special scheme under which the government bears part of forex risks.

"The announcement by the RBI will help in part to augment the NRI dollar deposits. Currently, USD 15 billion is outstanding under the FCNR deposits, and we believe with this measure, an additional USD

Single Page Format
Ads by Google
Reader´s Comments
| Post a Comment
Please Wait while comments are loading...