Correcting rupee against fundamentals ultimately futile, says RBI's ex-guv Subbarao
RBI moved lower.
· Economic Times Markets
D Subbarao advocates for allowing the rupee to find its level based on economic fundamentals. He criticizes costly short-term measures that do not address structural issues behind capital outflows. The rupee's recent recovery followed the Reserve Bank of India's measures to reduce dollar demand. Subbarao highlights the importance of tax reforms to attract foreign investment in India.
The analysis
Against that, the stock is +1.5% on the day at ₹132.36, and has returned -7.7% over three months. It sits 25% below its 52-week high, which means a good deal of bad news was already in the price. The banks sector has moved -3.1% over the same period, so Bank of India is running 4.6 points behind its peers.
For Bank of India, the question is how much of this is already reflected in the price and how much re-rates the banks peer set alongside it.
Why it matters
- With RBI involved, this carries a regulatory dimension that can outlast the immediate market reaction.
Market context
- The company directly in focus is BANKINDIA.
- Sector exposure: Banks, Capital Goods & Engineering, Capital Markets.
In this story
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