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On the back lower current account deficit (CAD) rupee appreciated today against the dollar and came below the Rs 60 level and was trading at Rs 59.56 against the dollar at 1.15 PM.
Yesterday Reserve Bank of India released CAD figures a day early in a surprise move which had stopped rupee’s further to close at Rs 60.20 against the dollar yesterday.
Bank of America Merrill Lynch said in a report that rupee however won’t stabilize until RBI recoup forex reserves and get back investor confidence.
RBI in past few days have intervened in the forex market either by selling dollars from reserves or through public sector banks to control the rupee’s slide however despite all its efforts rupee had breached psychological level of Rs 60 on Wednesday.
Indranil Sen Gupta, India Economist, DSP Merrill Lynch said that according to their estimates RBI can’t sell more than $ 30 billion to defend the rupee and central bank will need to augment forex reserves by taking some steps like issuing NRI bonds.
India’s forex reserves stood at $ 290.65 billion as of 14 June, 2013, according to the data by RBI.
