Wall Street brokerage Bank of America Securities India on Tuesday projected a zero per cent current account deficit for FY21 as it sees crude prices falling further from the current levels. The brokerage also said the Reserve Bank raising the ceilings for foreign portfolio investors in investing in government bonds by USD 30 billion can help its raise forex cover, which had the steepest fall in recent years plunging to close to USD 11.98 billion to USD 469.909 billion in the week to March 20.
This in turn open up the debt markets for the RBI to recoup the forex cover and thus defend the rupee which has been plunging to new lows in recent weeks, says the report, adding “RBI can sell USD 30 billion of forex to stabilise the rupee and at the same time augment the reserves to guard against contagion.
