Asian central banks and governments have been relying on certain measures previously to shoot foreign exchanges, may need to reconsider as a second line of defence, says international investments houses.
Looking forward to stabilise a steadily declining rupee, tried and tested measures maybe a resort for the Reserve Bank of India (RBI) to boost its foreign exchange reserves and encourage non-resident Indians to amplify deposits, economists said.
With the RBI protecting the rupee through dollar sales that depleted its forex reserves to 45 billion dollar from the pinnacle of 642 billion dollar a year ago. The Indian currency saw downfall of 9.5 per cent so far this year.
Asian central banks and governments have been relying on certain measures previously to shoot foreign exchanges, may need to reconsider as a second line of defence, says international investments houses.
Banks were allowed to lift up foreign currency non-resident deposits at higher costs and foreign investors were granted permission to buy shorter term local debt as a move to elevate more inflows by RBI in July.
Such measures have only resulted in marginal benefit, said analysts. Measures like those adopted in 2013, when the U.S. Federal Reserve announced its plans to reduce bond purchases which led to the Indian rupee go under pressure, be explored by the central bank, according to analysts.