INSUBCONTINENT EXCLUSIVE:
Forex cover for imports will go down to 9.6 months in FY19 and 8.6 months in FY20, said the report.Mumbai: The rupee will slide to 70 to a
dollar level if portfolio flows do not revive by December, and this may lead the government to raise money by selling bonds to the diaspora
again, a report said today
If the foreign portfolio investment flows do not revive by December, the rupee will depreciate further to over 70 to a dollar, analysts at
Bank of America Merill Lynch said in a note.Such an eventuality may lead the government to look at getting foreign inflows through the NRI
bonds, which has been done thrice earlier, it said
"The trigger for actual issue will likely be delay in revival of FPI flows till, say, December driving the rupee beyond 70 per USD," it
said.It can be noted that the rupee had breached the lifetime high and crossed the Rs 69 to a dollar level last week
However, it has gained in the last few trading sessions and opened at 68.33 today
Analysts at the American brokerage said Ministry of Finance "talked up" the rupee and also welcomed the North Block decision to consider NRI
bonds to support the rupee.It said the forex cover for imports will go down to 9.6 months in FY19 and 8.6 months in FY20, which makes the
case for stability in the rupee
The RBI will have to sell $20 billion from the $407 billion in order to ensure that the current account gap comes within the brokerage's
target of 2.4 per cent of the GDP, the note said.It can be noted that in the last few weeks, the reserves have also been declining,
suggesting interventions to avoid volatility
