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PROPPING OF RUPEE

Presenter:-Pradeep Singha

MARKET INTERVENTION: RBI sold dollars and bought rupees in September and October, according to data from the central bank, which only steps in to smooth volatility. Traders said the RBI has intervened multiple times in the FX market over the past month, including on December 15. RBI likely intervened via state-run banks which were seen heavily selling dollars pushing the rupee up in late trade,

OVERSEAS BORROWING BY MICRO LENDERS: On December 19, RBI allowed microfinance institutions to raise up to $10 million during a financial year through external commercial borrowings for permitted end-uses.

DEREGULATION OF INTEREST RATES ON NON-RESIDENT DEPOSITS: On December 16, RBI allowed banks to set interest rates on non-resident external rupee deposits and ordinary non-resident accounts to help attract more capital inflows.

CUTS FX TRADING LIMITS: On December 15: Reduced the net overnight open position limit of authorised dealers in the foreign exchange market, lowering the capacity of market participants to take trading positions.

OVERSEAS BORROWING RULES FOR COMPANIES EASED: On November 23: Raised the ceiling on interest rates that companies can pay on foreign loans, provided the funds are brought into India immediately

FOREIGN INVESTMENT LIMITS IN GOVT, CORPORATE DEBT RAISED: On November 17, The government increased the ceiling on foreign institutional investment in government and corporate debt by $5 billion each.

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