RBI gold curbs seek to keep INR in 52-56 band: BofA-ML

Reuters Market Eye - Bank of America-Merrill Lynch says RBI measures to curb gold imports supports its view the central bank will try to keep USD/INR in a 52-56 band if the dollar trades in the 1.2-1.3/euro band.

Tuesday's curbs will pose a $5-$10 billion downside risk to its $55 billion FY14 gold import forecast, says BofA-Merrill.

The investment bank notes that the rupee will continue to trade weak until RBI recoups $65 billion of FX sold since 2008 and recommends the central bank strategically buy FX to comfort markets.

BofA-Merrill expects the RBI to buy FX at the end of June if the rupee stabilises when Unilever is expected to pump in $5 billion to undertake an open offer for its Indian unit.

 

(Reporting by Subhadip Sircar)