Govt likely to cut 2% import duty on gold in budget:
BoAML
30/06/2014 13:03
The union government is expected to cut two per cent import duty in gold in the forthcoming budget, as local jewellers run out of inventory, US brokerage Bank of America Merrill Lynch said. "We expect a two per cent cut in gold import duty. In our view, the government will, sooner than later, have to withdraw gold import restrictions as local jewellers run out of inventory. The impending drought may also moderate gold import demand," Bank of America Merrill Lynch said in its report. We expect the current account deficit to widen to 2.6 per cent of GDP in FY15 from 1.7 per cent in FY14 especially as latent demand could lead to a spike in gold import demand, it said. BoAML also expect the RBI to recoup forex at Rs 58/USD levels. After all, Iraq has demonstrated how quickly sentiment can change in the forex market, when import cover is an inadequate eight months. BoAML also expects some relaxation within the overall USD 30 billion limit for gilts. The RBI needs to raise forex reserves to stabilise Indian rupee expectations. At the same time, sovereign wealth funds have not used up their on-tap USD 10 billion limit.
30/06/2014 13:03
The union government is expected to cut two per cent import duty in gold in the forthcoming budget, as local jewellers run out of inventory, US brokerage Bank of America Merrill Lynch said. "We expect a two per cent cut in gold import duty. In our view, the government will, sooner than later, have to withdraw gold import restrictions as local jewellers run out of inventory. The impending drought may also moderate gold import demand," Bank of America Merrill Lynch said in its report. We expect the current account deficit to widen to 2.6 per cent of GDP in FY15 from 1.7 per cent in FY14 especially as latent demand could lead to a spike in gold import demand, it said. BoAML also expect the RBI to recoup forex at Rs 58/USD levels. After all, Iraq has demonstrated how quickly sentiment can change in the forex market, when import cover is an inadequate eight months. BoAML also expects some relaxation within the overall USD 30 billion limit for gilts. The RBI needs to raise forex reserves to stabilise Indian rupee expectations. At the same time, sovereign wealth funds have not used up their on-tap USD 10 billion limit.
