Rupee Finds Potential Floor as RBI's Recent Policy Shifts Gain Favor with Goldman Sachs

Indian Rupee's Slide May Be Nearing a Floor, Says Goldman Sachs

The Indian rupee's slide may be nearing a floor after authorities unveiled measures to boost foreign inflows, according to Goldman Sachs Group Inc. The Reserve Bank of India and the government have taken steps to limit the depreciation pressure on the rupee, including tax exemption on foreign investments in government securities and opening up more debt categories for full foreign investor access.

These measures may draw as much as $50 billion in inflows, according to some analysts. Goldman's comments hold significance as the rupee fell to a new low of 96.9650 per dollar last month amid a surge in global crude prices and record overseas outflows from equities. The weakness has led some analysts to speculate that the currency may decline further to 100 per dollar.

Goldman Sachs has revised its forecast for the dollar/rupee cross rate. The Wall Street bank now sees the dollar/rupee cross at 96 in three months, from 97 previously. It kept its six-month forecast unchanged at 96, while seeing the currency at 97 in 12 months, from 96 previously. The rupee fell as much as 0.4% to 95.36 Monday, after gaining the most in over two months Friday.