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NRI Deposits Among Options Available With Government To Tackle Rupee, Says Source

Sharp losses in the US markets, followed by Asian peers, hurt the sentiment in the domestic equities.

The government expects the markets to stabilize and the rupee picking up after historic lows over the past few weeks, official sources told NDTV on Thursday even as the markets crashed on a global selloff. “All options are available to tackle the weakening rupee including NRI (non-resident Indian) deposits,” said a government official. The comments came after the Sensex crashed more than 1,000 points and the rupee touched a new all-time low of 75.45 against the dollar. Earlier, a report by news agency Bloomberg, citing people with knowledge of the matter, said that the government is considering tapping Indians living overseas to lure foreign exchange flows and prop up the rupee.

The official also cited lowering of world economic growth projection by the International Monetary Fund and the ongoing US-China tariff jitters as the reasons for the global rout witnessed in stocks.

The domestic equity markets nosedived as much as 3 per cent in intraday trade on Thursday, after a selloff in global peers. Sharp losses in the US markets, followed by Asian peers, hurt the sentiment in the domestic equities, according to analysts.

Uncertainty on the pace of hikes in the US interest rates, triggered by US President Donald Trump’s criticism of the Federal Reserve, and concerns on global growth after the IMF cut its annual projections,hurt markets across the globe. Investors sold across the board amid a confluence of factors, including rising interest rates in the United States, a heated Sino-US trade battle as well as IMF warnings about global financial stability and growth risks.

Citing fundamentals of Indian economy, the source said, “People have confidence in fundamentals of Indian economy… India will stand to gain if competitiveness is affected due to trade wars.” The United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other’s goods over the past few months, rattling financial markets as investors worry that the escalating trade conflict could knock global trade and investment.

IMF chief Christine Lagarde said stock market valuations have been “extremely high”, erasing hundreds of billions of dollars of wealth around the globe. Those comments came days after the IMF lowered its growth forecast for the world economy by two-tenths, to 3.7 per cent for 2018 and 2019. Ms Lagarde on Thursday described central bank interest rate hikes as a “necessary development”. US President Donald Trump, however, sent global markets tumbling by calling Federal Reserve rate increases “crazy”.

On IL&FS, the source said the new board is “taking right actions” leading to the markets gaining confidence. “Non-banking financial companies (NBFCs) are comfortable about the liquidity condition as banks are buying some of their assets,” he said.

The non-banking financial companies sector has been in the spotlight after IL&FS, a major infrastructure financing and construction company, defaulted on a string of debt obligations in recent weeks triggering wider concerns about risks in the country’s financial sector.

News Credit-Ndtv News

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