Rupee May Get a $50 Billion Boost as India Woos Foreign Capital

India’s battered rupee is set for relief as authorities rolled out a slew of steps to attract foreign capital, with analysts forecasting inflows of up to $50 billion.

The Reserve Bank of India on Friday fresh measures, including concessional foreign-exchange swaps and making more bonds eligible for foreign investment, to arrest the local currency’s slide. The government also cut capital gains taxes on debt investments by global funds.

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The measures may result in $30 billion to $50 billion of inflows this year, according to estimates by Emkay Global Financial Services and Motilal Oswal Financial Services. DBS Bank sees $30-$40 billion flowing in just from the central bank’s concessional swap for state firms’ overseas borrowing and a similar facility for banks’ deposits abroad.

The rupee gained as much as 0.8% to 94.9975 per dollar after the steps were announced, even as the monetary authority left its policy rate unchanged. Traders see the currency strengthening toward the 93 mark as dollar inflows hit the local market. That’s in contrast to that it could weaken to the unprecedented 100 per dollar mark as elevated oil prices strain India’s import bill.

Following are the key views:

Sneha Pandey , debt fund manager at Quantum Asset Management

Shaun Lim , foreign-exchange strategist at Malayan Banking

Jeff Ng , head of Asia macro strategy at Sumitomo Mitsui Banking Corporation

VRC Reddy , head of treasury at Karur Vysya Bank

Michael Wan , currency strategist at MUFG Bank

Diego Barnuevo, junior market analyst at Ebury

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