RBI can buy $9 bn more forex from market: BofA-ML
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RBI can buy $9 bn more forex from market: BofA-ML

Last Updated: Thursday, May 16, 2013, 21:34
 
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RBI can buy $9 bn more forex from market: BofA-ML
Mumbai: The Reserve Bank, which had bought USD 840 million of forex in March in an effort to shore up the reserves after a two-year hiatus, has leg room to snap up USD 9 billion more from the market, brokerage Bank of America Merrill Lynch (BofA-ML) said in a report Thursday.

The Reserve Bank can buy USD 9 billion according to the balance of payments estimates and after assuming the Brent crude to be at USD 110 a barrel, its economist Indranil Sen Gupta said in the note.

"The RBI has already reported that it had purchased USD 820 million in March. We estimate that it has bought another USD 1 billion since. It should also buy when Unilever money (for the buyback offer) comes in end-June," he said.

Such a move will not destabilise the forex market unless there is a "sudden spike" in the dollar, which the brokerage expects, will be trading at Rs 52.50 by the end of June, he said.

The report did not specify the period in which the RBI would buy dollars.

Helped by a surge in capital inflows, with the markets showing signs of buoyancy, the Reserve Bank last week reported that it bought USD 840 million in March, marking a shift from the recent years, where it was forced to sell dollars to help arrest the free-fall of the rupee.

The BofA-ML report identified the fall in oil and gold prices and FIIs' interest in the domestic markets as the swing factors for the RBI.

PTI


First Published: Thursday, May 16, 2013, 21:34


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