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HindustanTimes Wed,03 Sep 2014

Rupee to remain under pressure in near term: report

PTI  New Delhi, June 18, 2013
First Published: 21:15 IST(18/6/2013) | Last Updated: 21:19 IST(18/6/2013)

The rupee is expected to remain under pressure in the near term, given the strengthening of the dollar against major global currencies and widening of the trade deficit, says a report.

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According to global research firm Dun & Bradstreet (D&B), steps taken by RBI and government are likely to provide some support to the rupee going ahead.

D&B expects the rupee to average at around 57.20-57.40 per USD during June.

The rupee has depreciated nearly 6% over the past month and had hit a life-time low of 58.98 against the dollar on June 11.

The rupee on Monday plunged by 90 paise, or almost 1%, to trade at 58.77 against the dollar at the Interbank Foreign Exchange market due to renewed dollar demand from importers and appreciation of the US currency overseas.

D&B India Senior Economist Arun Singh said, "the Indian economy is currently undergoing a phase of consolidation which is expected to continue till September 2013, post which we are likely to witness a steady growth given a normal monsoon and no external shock."

"Although the Finance Ministry's statement to initiate a fresh round of policy initiatives brings forth the government's good intention, how quickly these are translated into action will lead to a boost in the investor's sentiment."

On rate cuts the report said RBI is likely to continue with its easing of monetary policy to support growth if the rupee stabilises in the near term.

Moreover, keeping interest rates high will only defer the investment intentions and discourage foreign investments in the domestic economy, D&B added.

RBI on Monday kept key policy rates unchanged in view of high food inflation, the declining value of rupee and global uncertainty, disappointing India Inc as well as retail borrowers.

The repo rate, at which RBI lends to banks, has been retained at 7.25%, while the Cash Reserve Ratio (CRR) will continue to be 4%.


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