Rupee recap

In mid-December, when the rupee fell to 54 to a dollar, RBI clamped down on long dollar positions of banks, restricted re-booking of cancelled forward contracts and invited NRIs to save more back home by freeing up interest rates on NRE deposits. After initially saying it would be foolhardy to defend the currency with reserves, RBI has sold some $15 billion. This, together with the return of ‘risk on’ trade in global markets, which resulted in a flood of dollars into the equity and bond markets of close to $14 billion in just under three months, helped kick up the currency all the way to 49.30.

Read Full Story>>