Bank of America-Merrill Lynch said RBI measures to curb gold imports supports its view that the central bank will try to keep rupee in a 52-56 band if the dollar trades in the 1.2-1.3/euro band.
BofA-Merrill said that Tuesday's curbs will pose a $5-$10 billion downside risk to its $55 billion FY14 gold import forecast.
The Reserve Bank of India extended restriction on gold import on consignment basis to all nominated agencies involved in gold imports including star trading houses, besides further tightening gold import procedures.
Earlier on May 13, the RBI had announced its decision to restrict gold imports on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery. "It has now been decided to extend the provisions of this circular to all nominated agencies/ premier/star trading houses who have been permitted by government of India to import gold." The RBI said in a circular issued to banks.
Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery.
The investment bank also said that the rupee will continue to trade weak until RBI recoups $65 billion of FX sold since 2008. It recommended the RBI to strategically buy forex to comfort markets.
BofA-Merrill expects the RBI to buy FX at the end of June if the rupee stabilises when Unilever is expected to pump in $5 billion to undertake an open offer for its Indian unit.
Source - Economic times
BofA-Merrill said that Tuesday's curbs will pose a $5-$10 billion downside risk to its $55 billion FY14 gold import forecast.
The Reserve Bank of India extended restriction on gold import on consignment basis to all nominated agencies involved in gold imports including star trading houses, besides further tightening gold import procedures.
Earlier on May 13, the RBI had announced its decision to restrict gold imports on consignment basis by banks, only to meet the genuine needs of the exporters of gold jewellery. "It has now been decided to extend the provisions of this circular to all nominated agencies/ premier/star trading houses who have been permitted by government of India to import gold." The RBI said in a circular issued to banks.
Accordingly, any import of gold on consignment basis by both nominated agencies and banks shall now be permissible only to meet the needs of exporters of gold jewellery.
The investment bank also said that the rupee will continue to trade weak until RBI recoups $65 billion of FX sold since 2008. It recommended the RBI to strategically buy forex to comfort markets.
BofA-Merrill expects the RBI to buy FX at the end of June if the rupee stabilises when Unilever is expected to pump in $5 billion to undertake an open offer for its Indian unit.
Source - Economic times
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