RBI KEEPS POLICY RATES UNCHANGED
Mumbai, Oct. 5: On a day the rupee breached the 74mark against the dollar for the first time, RBI governor Urjit Patel said on Friday that the domestic currency is still better than its emerging market peers.
He maintained that the value of rupee is determined by market forces and RBI does not have any “target or band” around any particular level of the exchange rate.
He said the foreign exchange reserves of $400.5 billion as of end September are sufficient to finance 10 months of imports.
His comments came as rupee crossed the 74-mark against the dollar on Friday afternoon after opening higher than its previous close at 73.52. He said the rupee has experienced bouts of volatility since the monetary policy committee meet in August.
The country has not been immune to global spillovers from external factors, he said.
However, after back-toback hike, RBI kept rates unchanged, surprising markets that had expected a rate hike to support rupee and combat inflationary pressures.
Mumbai, Oct. 5: In order to attract foreign investments, Reserve Bank on Friday proposed a Voluntary Retention Route (VRR) under which more flexibility will be accorded to foreign portfolio investors.
The regulatory framework for FPI investment in debt has evolved over the years, influenced by trade-offs, in encouraging capital flows and attendant macro-prudential considerations, RBI said in its statement on Developmental and Regulatory Policies.
Several measures have been undertaken in recent times to facilitate FPI investment in debt, it said. “To encourage FPIs willing to undertake long-term investments, a special Route called VRR is being proposed.
“Under the proposed route, FPIs will have more operational flexibility in terms of instrument choices as well as exemptions from regulatory provisions such as the cap on short-term investments (less than one year) at 20 per cent of portfolio size, concentration limits, and caps on exposure to a corporate group (20 per cent of portfolio size and 50 per cent of a single issue),” it said.
To be eligible to invest under this route, it said, FPIs will need to voluntarily commit to retain in India a minimum required percentage of their investments for a period of their choice. FPIs would apply for investment limits under the route through an auction process, it said.