Goldman Sees Rupee Weakness Capped After Steps to Boost Inflows
The Reserve Bank of India and the government unveiled measures to boost foreign inflows, which should limit the depreciation pressure on the rupee, according to Goldman Sachs Group Inc. The measures include tax exemption on foreign investments in government securities and exemptions for banks raising foreign-currency bonds and deposits, and may draw in inflows. Goldman Sachs now sees the dollar/rupee cross at 96 in three months, and does not expect substantial spot appreciation, as any renewed capital inflows should be used to rebuild the reserve buffer.
➤ Goldman Sachs believes recent measures by India's RBI and government will limit rupee depreciation by boosting foreign inflows. ➤ These measures include tax exemptions on foreign investments in government securities and exemptions for banks raising foreign-currency bonds. ➤ Goldman Sachs forecasts the dollar/rupee at 96 in three months, with inflows expected to rebuild reserve buffers rather than cause substantial spot appreciation.
