If they fall short, they will have to buy these dollars in the spot market, putting pressure on the rupee. Bank of America Merrill Lynch (BofA ML), for instance, believes the rupee will come under pressure only if outflows cross $15 billion. India’s foreign exchange reserves climbed to a record $367.76 billion as on 2 September, some $19 billion higher compared with the beginning of the year. The 12% appreciation of real effective exchange rate over the last three years is clearly at odds with the government’s commitment to support a surge in manufacturing,” wrote Deutsche Bank analysts in an 8 September report. They expect the rupee to slide to 70 per dollar by the end of this year.

Source: Mint September 11, 2016 18:00 UTC