As the rupee touched a new low of 64.54 against the US dollar on Wednesday, everyone from the man on the street to money market professionals and policymakers seemed to have one question in mind: How far is the rupee from touching a scary 70 to a dollar?
In a poll of 10 brokerages by HT, most expected the rupee to fall to 70 against the dollar in the next three months, partly mirroring the government’s and the Reserve Bank of India’s inability to control a free-falling domestic currency.
“We now believe that the rupee could touch 70 to the dollar in a month or so, although we expect some revival of the currency by the end of the year as the reality of taper turns out to be less disruptive down the road than it is now, and the current account deficit continues to decline,” Deutsche Bank said in a report.
Out of the 10 brokerages, five said they expect the rupee to be in the 66-70 range, two expect it to correct to 61-62 range while three refused to give any level.
“On Wednesday, the rupee tracked the fall of Indonesian, Turkish and South African currency,” said Anindya Banerjee, currency Aaalyst, Kotak Securities. “Dealers were also disappointed by the lack of clarity on the RBI’s stance,” he said.
The currency recovered marginally but still ended the day at a record closing low of 64.11.
“The rupee will rebound only if the government comes out with some reform measures,” said Monjit Gogoi, regional director, Alpari Financial Services India.