India cenbank acts to enhance foreign fund inflows, stabilise rupee



(Updates with details, quotes)

By Swati Bhat

MUMBAI, July 6 (Reuters) - India's central bank took a slew of measures on Wednesday to boost foreign exchange inflows, including allowing overseas investors to buy short-term corporate debt and opening of more government securities under the fully accessible route.

The steps came after the Reserve Bank of India's foreign exchange reserves fell by more than $40 billion over the past nine months, largely due to the RBI's intervention in the currency market to cap rupee losses.

The Indian currency has shed about 6% of its value against the dollar since the beginning of this year. The rupee closed trading on Wednesday at 79.3025 per dollar, not far from its record low of 79.3750 touched on Tuesday.

The RBI said it would allow foreign investors to buy 7- and 14-year tenure government bonds without any upper limits under its "fully accessible route", along with previously opened-up 5-, 10- and 30-year tenure securities.

"While it is difficult to ascertain the quantum of flows, the measures are attractive for banks and FPIs," said Suvodeep Rakshit, senior economist at Kotak Institutional Equities.

Rakshit said India's macro situation is better than during the 2013 taper tantrum period but these measures would alleviate and pre-empt the adverse impact on the external sector balance.

The RBI said it was taking the new measures to "enhance forex inflows while ensuring overall macroeconomic and financial stability".

TEMPORARY SOLUTION

It also allowed banks to raise deposit rates for non-resident Indians to levels higher than prevailing domestic deposit rates for a limited period.

Banks can accept deposits from non-resident Indians at higher rates from July 7 until Oct. 31.

"These measures, including raising the borrowing limits for companies as well as liberalising offshore ownership in government debt, are intended to ease onshore dollar tightness and support the rupee," said Radhika Rao, economist at DBS Bank.

Further, the central bank raised the external commercial annual borrowing limit for Indian corporates under the automatic route to $1.5 billion per company from $750 million.

A senior executive at a state-run bank said the RBI measures could also bring down short-term borrowing rates, now very high, and though they might not lure immediate inflows, they are a signal to the market that the RBI is there to come up with innovative measures as and when needed.

"All the measures announced are temporary with in-built sunset clause," said Vivek Kumar, an economist with QuantEco Research. "We believe these measures can provide some stability to the rupee. However, they are unlikely to alter the trajectory of weakness perpetuated by global factors."
Additional reporting by Aftab Ahmed and Nupur Anand; editing by Andrew Heavens, Frank Jack Daniel and Mark Heinrich

Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.

Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.

Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.

Gumagamit kami ng cookies para mabigyan ka ng mahusay na karanasan sa aming website. Magbasa pa o palitan ang iyong cookie settings.

Babala sa Risk: Maaaring malugi ang iyong kapital. Maaaring hindi nababagay sa lahat ang mga produktong naka-leverage. Mangyaring isaalang-alang ang aming Pahayag sa Risk.