Last week the sharp movement in the rupee which led it to levels below 70 mark to trade at 70.40 on an intra-day basis relate to several other macro woes such as the plunging of forex reserves of the country and a more likely CAD deficit to be faced by the country this fiscal year.

And as a general tendency RBI and the government is likely to intervene to prevent its further free-fall. And in light of the current turmoil prevalent in the currency markets world across fuelled by Turkish lira, currency experts expects the RBI and government to tame rupee's fall by re-considering a similar step it took way back in 2013 i.e. opening the window for swapping fresh FCNR deposits to banks to prevent any further downslide in the rupee.

Adverse macros call for mobilizing NRI or FCNR deposits

Stabilisation of the rupee is necessary as the ripple effect of several other macros such as declining forex reserves, widening trade deficit and a higher CAD this fiscal year is to be tackled by as per experts by mobilizing foreign currency investible assets.

An economist at India ratings is quoted as saying in one of the reports as "Capital inflows or the portfolio investments have not been that strong and the current account deficit has widened. Therefore, we could see a deficit on the balance of payment. We believe the government and the RBI, together, will go for NRI deposits, something similar to 2013, to the tune to $25 billion this fiscal to stabilise the rupee"

And on implementation of such a step on this scale is likely to spruce up the rupee on an average to the scale of 68.40 for a dollar or it could even tread higher.

Also, he re-iterated that "Foreign portfolio investments (FPI) have been negative. It's only in July that the FPI investment picked up but there is already a hole in the entire year's capital flow. The FDI is there but it is not that much that it will able to compensate for higher trade deficit because of oil prices. Today, the government has come out with the estimates of import bill being higher by $26 billion". And in light of the available data and projections made, trade deficit is likely to reach an all-time high level this fiscal year.

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