........................ In the first week of December, a surge in demand for capital and consumer goods led to higher imports, eating up $12 billion of India's foreign currency. The RBI reacted quickly and allowed banks to pay prevailing deposit rates on NRI accounts. This would create a natural arbitrage for those receiving dollar loans abroad and making bank deposits in Indian banks to earn higher interest returns, thus ensuring higher dollar inflows. Rating agency Moody's says the rupee would stabilise below 050 against the dollar in six months. But till then, the RBI will keep a close watch on it.
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