Opinion divided on rupee’s future
Which way is the rupee headed? Some say up, and some say down, showing expert opinion sharply divided on the issue.Updated: Mar 05, 2009 22:07 IST
Which way is the rupee headed? Some say up, and some say down, showing expert opinion sharply divided on the issue.
“We feel that the rupee is likely to depreciate to about Rs 54 in the June to September quarter of 2009 before getting back to the Rs 50-levels that it is seeing right now,” Mohan Shenoi, treasury head, Kotak Mahindra Bank told Hindustan Times.
However, research firm Dun & Bradstreet said in an outlook report on the Indian economy that though the external account is under stress, foreign institutional investor (FII) inflows will resume and the US dollar will have an average value of Rs 47.5 to the US dollar in 2009/10 and close that year at Rs 46.5.
Shenoy, focusing on increased foreign capital outflows, said reduced dollar demand on the trade account was not sufficient to balance out concerns on capital flows. “Hence the rupee has depreciated against the dollar despite the recent reduction in trade deficit,” he said.
Net FII outflows from Indian markets in the current financial year to date stood at $12 billion — a key cause for the rupee’s depreciation against the dollar.
A dip in imports has also added to the rupee’s weakness. “We would see the rupee ending the year in the region of 5 per cent over or below the current trend unless the trend of capital outflows is radically reversed and imports and exports both go up,” said Bapi Munshi, president, treasury, Axis Bank.
First Published: Mar 05, 2009 22:06 IST