NEW DELHI: The Reserve Bank of India (RBI) has been requested by the Federation of Indian Export Organisations (FIEO) to raise the packing credit in Foreign Currency (PCFC) rates, which are in line with market realities, said Mr Ramu S Deora, President of FIEO. Mr Deora while speaking on the all-in-cost trade credits to 350 basis points (from 200 basis points) has stated that this would be helpful in achieving more dollars inflows to the Indian market. Mr Deora, said, “This is in keeping with the demand as the differential between rupee interest rates and dollars has accentuated further with the 13th hike on 25th October 2011 pushing policy rates to 8.5% whereas a six month LIBOR is still around 1%.” FIEO feels that RBI’s move to surge FCNR(B) deposit rates by 25-basis points will also accentuate dollar inflows (125 basis points from 100 basis points) apart from NRE term deposits where the banks can pay either LIBOR or at swap rates. Recently, RBI has surged the interest rates on Non-Resident (External) (NRE) Rupee term deposits and Foreign Currency Non-Resident (Banks) (FCNR-B) deposits. This move is likely to surge the flow of foreign exchange in midst of the poor domestic currency. The surge in rates will be making the funds more lucrative at a time when the Indian Rupee has declined strongly in the past few months.
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