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97% expect no change in CRR in RBI October policy review

More than 55% of the respondents expect the RBI to increase the Repo and Reverse Repo rates by at least 25 bps this policy review, RBS survey says

October 22, 2013 4:04 IST | India Infoline News Service
The Royal Bank of Scotland conducted its 18th survey on RBI’s quarterly policy review meeting. A majority of the respondents are expecting a hike in the Repo rates this policy cycle, according to the survey.

The market seems poised for an increase in the Repo and Reverse Repo rates and no change in the CRR rates in the long term. However, more than half of the respondents expect at least a 25 bps increase in Repo and Reverse Repo.

More than 55% of the respondents expect the RBI to increase the Repo and Reverse Repo rates by atleast 25 bps this policy review. A significant 97% expect no change in CRR this policy review, the survey added.

On USD / INR, more than 22% of the respondents said they were looking to buy USD/INR irrespective of the direction of the market, post policy. A majority of the respondents intend to do nothing on the OIS, regardless of the direction of the market, after the policy decision.

The Market expects the USD/INR to remain between in the range of 59 and 64 in the medium term, RBS said.

Over 50% of
the respondents believe that USD/INR will trade in the range of 62 to 65 till Dec 2013. Around 42% see the rupee strengthening to below 62 levels by December’13, while only 35% expect the same by March 2014.

Around 59% of the market participants believe that USD/INR market is trading neutral. While 23% believe that the market is long.

Over a longer term, the market does not expect any significant change in the 5y OIS and 10y G-Sec yields. About 83% of the market participants believe that OIS market is trading
neutral and 12% believe that the market is paid.

The survey covered 150 local market participants including corporate clients, banks, insurance companies and mutual funds among others. RBS received 110+ responses in total with 56% of the responses from our corporate clientele and rest from Financial Institutions.


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