Paresh Nayar, Mumbai-based head of money-market and currency trading at FirstRand Ltd., comments on the outlook for India’s rupee after the central bank tightened rules for currency forwards, seeking to temper speculation.
Forward contracts once canceled cannot be bought again, the Reserve Bank of India said in a statement on its website today, after the rupee fell to a record low of 54.305 per dollar.
“This is a good step to curtail the rupee’s weakness. The move will curb building of speculation in the market. This is possible as the rupee is not fully convertible. The central bank has lot of controls and that’s one advantage.
‘‘The rupee may gain past 53 per dollar in initial trades tomorrow and there is a possibility the currency will move toward 52 during the day.”
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