Tag Archives: rupee

RBI can sell upto $30bn to support rupee; may opt for NRI bond


In order to arrest rupee depreciation, the Reserve Bank of India has a capacity to sell up to $30 billion from the forex reserves and may go for an NRI bond issue to mop-up up to $20 billion, foreign brokerage Bank of America Merill Lynch said on Monday.

“We expect the RBI to eventually mobilise $20 billion via NRI bonds, a la 1998 Resurgent India Bonds and 2001 India Millennium Deposits, as the sell-off of emerging market debt should constrain the ability of FII debt limit hikes to raise forex reserves,” it said, adding that the central bank can sell upto $30 billion to support the rupee.

The BofAML report said that five year money can be raised by issuing the 7 to 9% coupon bonds to stabilise markets, just as it was done in 1998 and 2001.

The country’s banks had raised $4.8 billion and $5.5 billion from the bonds targeted at the diaspora during the economic crisis years in 1998 and 2001, respectively.

BofAML said it expects RBI to defend the Rs. 60 to a dollar level. The rupee opened 40 paise down against the dollar on Monday and was trading at Rs. 59.74 to the dollar at 2:37pm.

Every round of volatility in the rupee (the current one has been on for over three weeks now) causes a dent of up to $15 billion to the forex reserves, and considering where the reserves stand right now, RBI can sell up to $30 billion, the report said.

The selling will get the country’s import cover down to six months from the current seven months, the BofAML said.

Its strategists expect the rupee to peak at Rs. 59 to a dollar, according to the report.

RBI will start buying rupee once markets stabilise and the inflows from Unilver buy back, which would be in the region between $3 billion and $5 billion, happen,  it said.

Raising the rates is not the answer to arrest the fall in rupee, it said, noting that the differential between the $Federal Reserve’s lending rate and the RBI’s is already at a peak of 7%.


Rupee ends off day’s low at 59.68 against dollar


The rupee fell to near record lows on Monday as foreign investors continue to sell debt and stocks as part of an exit from emerging markets, with only fears of central bank intervention arresting a further drop.

The partially convertible rupee closed at 59.68/69 per dollar, against its previous close of 59.27/28. It fell to a low of 59.8250 in session.

The rupee is likely to continue hovering around a record low of 59.9850 hit on Thursday as long as global markets remain weak over worries about the rollback of U.S. monetary stimulus and concerns about China’s financial sector.

Dealers were split about whether the Reserve Bank of India (RBI) had intervened in the spot and onshore forward markets, suggesting any action would not have been strong. The central bank is seen likely to defend the 60 level for the rupee, which also provides formidable technical and psychological resistance.

Reserve Bank of India Deputy Governor Anand Sinha said on Monday the central bank and the government are doing whatever is needed to get a “hold over” the deteriorating macro economic conditions.

Investors are now awaiting the release of the current account deficit data on Friday, which will underline whether the funding pressures for the economy will further rise.

“One key factor is whether foreign equity investors pull out. But the government and RBI look determined to take steps to stem the rupee’s fall,” said Samir Lodha, senior partner at QuantArt.

“The RBI seems to have been active in the forex market over the past few sessions. They seem to be protecting the 60 level for now.”

The Sensex shed 1.2 per cent on continued worries about outflows after foreign institutional investors sold cash shares for nine straight sessions, totalling Rs. 7760 crore, as per exchange and regulatory data.

Foreign funds have sold a net $5.33 billion in rupee debt since May 22, the day Fed Chairman Ben Bernanke first hinted at stimulus withdrawal.

In the offshore non-deliverable forwards, the one-month contract was at 60.14, while the three-month was at 60.84.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 59.79 with a total traded volume of $6.4 billion.

CNG prices in Delhi hiked by Rs.2 per kg due to weak rupee


Picture for representation

CNG price in New Delhi was on Monday hiked by Rs.2 per kg, the second increase in rates since January, due to rupee depreciation.

Also, piped cooking gas (called PNG or piped natural gas) rates were also increased by Re one with effect from midnight tonight.

CNG sold to automobiles in Delhi will cost Rs.41.90 per kg from midnight as compared to Rs.39.90 currently. The rates of CNG in neighbouring Noida, Greater Noida and Ghaziabad have been hiked by Rs.2.25 to Rs.47.35 per kg.

“The consumer price of PNG to the households in Delhi is also being revised from Rs.23.50 per standard cubic metre to Rs.24.50 per scm for consumption of up to 30 scm in two months,” Indraprastha Gas Ltd (IGL) said in a statement.

For consumption of more than 30 scm in two months, the applicable rate in Delhi would be Rs.40.50 per scm.

Due to higher taxes in Uttar Pradesh, PNG in Noida, Greater Noida and Ghaziabad would cost Rs.26 per scm, up from Rs.25 per scm for consumption of up to 30 scm in two months.

Price for consumption beyond that level will be Rs.43.

CNG price was last hiked on January 5 when rates went up by Rs.1.55 per kg.

PNG price was last hiked on February 10 by Rs.1.50 per scm.

“The recent steep appreciation of the dollar vis–vis rupee as well as the increased dependence on imported LNG has resulted in major increase in our input cost of gas, which has necessitated the increase in retail prices of CNG and PNG,” IGL said.

IGL said there has been a sharp depreciation of the rupee vis-vis dollar in the last one month.

The base price of natural gas being procured by IGL from all its sources — domestically produced as well as imported liquid gas (LNG or liquefied natural gas) — are dollar linked thereby making the entire input price totally dependent on price of dollar vis-a-vis rupee.

“However, this increase would have minor impact on the per km running cost of vehicles,” it said.

For autos, the increase would be 6 paisa per km, for taxi it would be 10 paisa per km and in case of buses, the increase would be 57 paisa per km, which translates to around one paisa per passenger-km.