The bruised Indian Rupee will remain under pressure against the US Dollar and other currencies as it continues to be battered by concerns over a wide current account deficit and government policy that keeps foreign investors out of the country.
The Rupee is likely to trade around 59.0 in a month’s time, then 58.0 in six-months, before reaching 57.5 in a year’s time, a rise of 4% from today’s levels. The slow rise would mark only a modest rebound for emerging Asia’s worst performing currency so far in 2013.
The US Federal Reserve’s suggested tapering of its monetary easing policy has hurt risky assets widely across Asia but has particularly hammered the Rupee due to India’s fiscal imbalances.
“We’ve been pretty cautious on the Indian rupee for a while now,” said Dominic Bunning, foreign exchange strategist at HSBC.
“It is going to be difficult for Asian countries to attract foreign flows and especially for India where the current account deficit is wide which creates Dollar demand.”
India’s record high current account deficit has ballooned to a record high of 4.8% of GDP in the fiscal year ending in March which has led to driving overseas investors out of the country. To combat the Rupee’s decline the Indian Central Bank has discreetly contacted trading desks with unusually explicit messages to cut their speculative positions in the currency.
The Rupee has lost over 8 percent so far this year and has practically been on a one-way street since mid-2011. It hit an all-time low of 60.76 last week.
Current Rupee (INR) Exchange Rates
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 92.0242 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 78.4238 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.3444 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 54.9955 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 47.0107 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 57.3772 >
(Correct as of 11:10 am GMT)
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