Since last couple of months RBI buying dollar in both cash & future market. In June RBI bought $11.3 bn in future market. This forward exposure may have taken in view of FCNR dollar exposure of RBI. Normally RBI act as stabilizer for INR but recently RBI buying dollar even when INR was depreciating. In June RBI bought $11.8 bn dollar while INR depreciated to 59 from 60. Read the complete story here.
This increased dollar buying could be related to RBI's efforts to build sufficient foreign exchange reserve to face capital account crisis that could arise when US increase the tapering. India faced the crisis in 2013 when INR depreciated to 69 in very short time and volatility of INR was very high. IMF also said India should prepare a plan to respond to volatility in global currency markets that may come as the U.S. Federal Reserve reduces monetary stimulus, the International Monetary Fund staff said in a report."
This increased dollar buying could be related to RBI's efforts to build sufficient foreign exchange reserve to face capital account crisis that could arise when US increase the tapering. India faced the crisis in 2013 when INR depreciated to 69 in very short time and volatility of INR was very high. IMF also said India should prepare a plan to respond to volatility in global currency markets that may come as the U.S. Federal Reserve reduces monetary stimulus, the International Monetary Fund staff said in a report."
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