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7 September 2017
 |
RBI(The Total Investment & Insurance
Solutions)
The Reserve Bank is expected to buy forex
reserves at every opportunity to combat global contagion, a Bank of America
Merrill Lynch report said.
The report said the rupee is expected to
reach Rs 66.75/USD level by December.
According to BofAML, the RBI has bought about
USD 16 billion in the spot market since April. The Total Investment & Insurance Solutions
"We
continue to expect the RBI to recoup forex reserves to combat global contagion.
The import cover looks comfortable at about 11 months on 1-year forward basis, well
above the 8 months we deem required for INR stability," Bank of America
Merrill Lynch (BofAML) said in a research note.
One of the key factors that require the RBI
to recoup forex include moderation in capital flows on account of rich equity
valuations.
Moreover, FPI G-sec limits are almost
exhausted.
"The BSE Sensex is trading at 1-year
forward P/E of 20x far higher than the average of 16x," BofAML said adding
that its equity strategists see BSE Sensex at 30000 by December. The Total Investment & Insurance
Solutions
Other reasons cited by the report include,
moderation in global liquidity with the Federal Open Market Committee (FOMC)
likely to cut down quantitative easing (QE) and foreign investors may favour
China over India in bear markets, especially given rising index weights. The Total Investment & Insurance
Solutions
BofAML further said that 'imported' inflation
risks are coming off on a weaker US Dollar and low oil prices and "BJP
will likely continue to be INR conservative in the run up to the 2019
polls". The Total Investment &
Insurance Solutions
The Asia forex strategists at the global
financial services major expect Rs 66.75/USD by December. The Total Investment & Insurance
Solutions
The rupee is currently hovering around Rs 64
against the US dollar.The Total
Investment & Insurance Solutions
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