Gold Silver Reports — Rupee Will Fall, No it Won’t: Top Forecasters Split — The rupee’s top-two forecasters are at odds as to how vulnerable the world’s fastestgrowing major economy is to outside shocks.
HDFC Bank, which had the most accurate estimates quarterly rankings, sees US Federal Reserve policy tightening driving a 2.4% decline in the currency to 68.50 per dollar by March 31, from 66.89 on Monday. National Australia Bank, placed second, says the rupee will strengthen to 66.20 as economic growth and a narrowing current account deficit help offset any outflows from emerging markets.
“The rupee could take a bit of beating along with other regional currencies,“ said Tushar Arora, HDFC’s senior economist for treasury based near New Delhi.
The Fed’s December decision “could lead to uncertainty in global financial markets and a risk-off episode,“ he said.
HDFC’s view the rupee will weaken to its record low of 68.845 set in August 2013 was bolstered on Thursday, when the currency slid the most in three months after Fed minutes boosted the case for higher US rates.
India’s currency strengthened 1.4% in the third quarter, the most in two and a half years, and National Australia Bank says foreign investors will keep buying.
“India is experiencing relatively strong growth, which should attract inflows,“ said Julian Wee, senior markets specialist for Asia at the lender in Singapore. “Gradual lowering of the policy rate should also benefit both local equities and bonds, while leaving a stillhealthy carry premium over the dollar and many other Asian currencies.“
— Neal Bhai Reports
Rupee Will Fall, No it Won’t: Top Forecasters Split