Amid concerns over possible impact on markets of USD 20 billion outflows due to imminent maturity of a non-resident deposit scheme, the government sources today said there are adequate reserves to deal with these redemptions.
Government has option of rollover if investors want, highly-placed sources said.
When the rupee had a freefall to a life-time low of Rs 67.85 due to the US Federal Reserve 'taper tantrums' in the summer of 2013, India had mobilised USD 26 billion through foreign currency non-resident bank account (FCNR-B) deposits by offering a special swap window for banks. The three-year deposits are maturing starting September.
Concerns have mounted on the impact of these redemptions on rupee and bond markets with RBI Governor Raghuram Rajan, who is credited to have contained rupee volatility soon after joining RBI about three years ago, saying no to a second term after his current tenure ends on September 3.
Seeking to allay concerns, the sources said that government is ready to redeem USD 20 billion FCNR-B deposits as there is adequate forex reserves.
After touching a record high last week, the country's foreign exchange reserves declined by USD 231 million to USD 363.233 billion in the week ended June 10.
In the previous week, the reserves had increased by USD 3.27 billion to hit an all-time high of USD 363.46 billion.
In his message to the RBI staff this weekend, Rajan had said: "There could be outflows of USD 20 billion or so (due to the FCNR-B deposit redemptions). We have covered these outflows in the forward markets and before the maturity of the deposits we will take some advance deliveries leading up to the maturity.
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