It seems that the RBI has lost sleep over the outlook on INR going forward. At least,
the spate of measures undertaken by the RBI in a short span of time to shore up the INR,
at the cost of economic growth, seems to suggest so. These measures may at best arrest,
if not reverse, the sharp depreciation of the INR going forward.
Some steps taken by the RBI -
1. Banks barred from proprietary trading in currency futures and exchange traded options.
2. Lenders allowed to trade only on behalf of clients.
3. Borrowing under liquid adjustment facility (LAF) capped at Rs.75000 cr.
4. The lending rate for marginal standing facility (MSF) hiked by 200 bps.
5. Open market sale of bonds worth Rs.12000 cr.
6. LAF borrowing cap further tightened to 0.5% of every bank's deposits.
7. Banks are required to keep CRR balance of 99% (up from 70% earlier).
the spate of measures undertaken by the RBI in a short span of time to shore up the INR,
at the cost of economic growth, seems to suggest so. These measures may at best arrest,
if not reverse, the sharp depreciation of the INR going forward.
Some steps taken by the RBI -
1. Banks barred from proprietary trading in currency futures and exchange traded options.
2. Lenders allowed to trade only on behalf of clients.
3. Borrowing under liquid adjustment facility (LAF) capped at Rs.75000 cr.
4. The lending rate for marginal standing facility (MSF) hiked by 200 bps.
5. Open market sale of bonds worth Rs.12000 cr.
6. LAF borrowing cap further tightened to 0.5% of every bank's deposits.
7. Banks are required to keep CRR balance of 99% (up from 70% earlier).
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