New Delhi, March 30 (IANS). After the new initiative of the Reserve Bank of India (RBI), the Indian Rupee opened 1.3 percent stronger against the dollar at 93.59 on Monday.
In fact, to curb speculation in the foreign exchange market, the RBI has instructed banks to limit their open positions in rupees to $ 100 million, the aim of which is to prevent the fall of the rupee.
The central bank has asked authorized dealer banks to limit their onshore positions to $100 million by the end of the day. Besides, instructions have also been given that all commercial banks should implement this rule by April 10. According to the market situation, RBI may set different limits in future.
According to estimates, the size of such open positions ranges from $25 billion to more than $50 billion.
The rupee had weakened by more than 4 percent in March due to global tensions. Last Friday, it had fallen by about 1 percent to 94.8125 and had touched the level of 94.84.
Analysts say that the continuously high prices of crude oil are putting pressure on the rupee and the entire economy. The ongoing tension in West Asia has now entered its fifth week and there are signs of further increase.
He said that due to increasing conflict in West Asia, involvement of Houthi rebels and sending additional troops by America, the price of Brent crude has again increased to about $ 116 per barrel.
Experts believe that earlier the Indian economy was in a strong position, with fast growth, low inflation and stable deficit, but now the situation has weakened. Now, in the coming time, there is a possibility of GDP growth slowing down, inflation increasing and fiscal and current account deficit increasing.
However, the market has already taken these risks into account to a large extent. The P/E ratio of Nifty has come down to around 19.9 times, which is considered okay at the moment, but cannot be called cheap yet.
According to analysts, this step of RBI can support the rupee in the near term. Rupee may strengthen due to reduction in large dollar positions.
At present, dollar demand and oil-related inflation threats are keeping the rupee under pressure. Unless there is a big fall in crude oil prices, the rupee may remain weak.
Meanwhile, Brent crude futures rose as much as 3.66 per cent to close at $116.70 per barrel, while US WTI crude rose 3.75 per cent to trade at $103.38 per barrel.
–IANS
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