SBI Report: Rupee expected to rise strongly if market stabilizes, claims SBI report

New Delhi|According to a report by State Bank of India (SBI), the Indian rupee may see a strong recovery after the current market uncertainties end. The dollar index (DXY) still has some momentum left, but SBI said the rupee could rebound strongly after a period of volatility like the same time, citing similarities with the 2016-2017 period, the report said.

It was told in the report – Where is the dollar strengthening from?
The dollar index (DXY) is an index of the value of the dollar relative to a basket of foreign currencies. The report has highlighted that the dollar index may continue to move upward due to several factors. It also involves a reversal of global financial flows on the dollar. The dominance of “big tech” companies supporting pro-economic growth policies, such as Donald Trump’s “Make America Great Again”, contributes to the dollar’s strength. SBI reported that India’s currency circulation (CIC) has increased by Rs 78,000 crore in the current financial year, reaching about Rs 35.9 lakh crore, about 11 per cent of the country’s GDP. In addition, the Reserve Bank of India (RBI) sold Rs 1.7 lakh crore in the Forex market to hold the rupee until November 2024. Through this, there has been active intervention in the foreign exchange market.

According to SBI, the worst phase of rupee is going to end soon
“As of November 24, net foreign exchange sales from the Reserve Bank of India stood at Rs 1.7 lakh crore and we believe that at least as of today, it would have easily surpassed the Rs 1.7 lakh crore mark given the fall in the rupee”, the State Bank of India report said SBI believes that the worst phase may end soon. The value of the rupee is expected to improve after global economic uncertainties ease and market conditions stabilize. This outlook is a ray of hope for India’s currency, facing a challenging macroeconomic environment in recent times.

RBI may amend liquidity management framework: SBI
According to a report by State Bank of India ( SBI), the Reserve Bank of India (RBI) may announce important changes in its Liquidity Management Framework (LMF). These adjustments may include daily variable rate repo (VRR) auctions as a first step. At the same time, innovative measures to balance liquidity needs and strengthen the banking system may also be included. SBI said, “Possibility of further changes in RBI Liquidity Management Framework…Daily VRR first step…Such changes and next round initiatives are smart and practical by RBI…The delicate mix of temporary and permanent liquidity injections/withdrawals is still in progress”