RBI sits on strong forex kitty to support Re

Mumbai: Amid pressure on the rupee, a German brokerage on Thursday said the RBI can spend up to $30 billion from the over $594 billion forex kitty to defend the domestic currency. Even after spending the money, India will be left with reserves sufficient to take care of import bills for ten months, Deutsche Bank said in a note. The rupee is trading close to its all-time high against the US dollar at around Rs83.30, and the Reserve Bank is actively intervening in the forex market to curtail volatilities, it added.

“The RBI can easily spend at least $30 billion to defend the rupee, and even then, the import cover will remain around 10 months,” the brokerage said in its report. The rupee rose by 5 paise to close at 83.06 against the dollar at the end of the day’s trade on Thursday.

The brokerage also estimated that the headline inflation will cool off sharply to five per cent for September, from 6.8 per cent in August, on a decline in the vegetable prices, but noted that there is an increase in global crude prices to $95 a barrel. However, the fuel station prices are unlikely to change despite the pressure from global crude, owing to the upcoming state elections, which will be followed up with general elections, the brokerage said. It also said that the central government recently cut prices of domestic cooking gas up to Rs200 per cylinder, which will lead to a 0.25 per cent decline in the CPI.