StanChart sees rupee at 53 per dollar by year end
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StanChart sees rupee at 53 per dollar by year end

Last Updated: Wednesday, March 06, 2013, 23:46
 
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StanChart sees rupee at 53 per dollar by year end
Mumbai: Despite the steep fall of the rupee post-Budget, Standard Chartered sees the domestic currency appreciating to 53 level against the dollar by the end of this year on the back of the improving fundamentals.

It also says that health of the domestic economy has improved compared to the first half of 2012, and the market disappointment after the Budget with regard to rupee appears "overdone".

"The pessimism about the rupee appears overdone. The economic backdrop is not as weak as in H1 of 2012-the key differences being the fall in WPI inflation towards the upper bound of the RBI's (4-6 per cent) comfort zone, some resolution to the policy paralysis, the initiation of fiscal consolidation and reduced sovereign-downgrade risks," it said in a report.

It, however, added the rupee may extend weakness in the near-term from the current level.

The rupee gained around 20 paise to touch 54.72 to the dollar today tracking the rise in equity market.

According to the report, the rupee is likely to be at 54.5 level per dollar by the end of March, 55 by the end of June, 53.5 by the end of September and 53 by December.

The report also points out that despite the concerns raised about the health of the economy, the government's commitment to contain fiscal deficit and attract foreign investments to bridge current account deficit are positive for the economy.

"Admittedly, domestic growth outlook is still fraught with uncertainty, and the current account deficit has widened to a record high. However, given the finance minister's focus on attracting foreign investment to bridge the CAD gap, it is too early to write off the likelihood of further policy reforms to revive growth and encourage capital inflows."

It further said the government's adherence to fiscal consolidation would support rate cuts by the RBI. "We expect the RBI to cut policy rates by 25 basis points on March 19, which should provide a floor to growth expectations," it said.

PTI


First Published: Wednesday, March 06, 2013, 23:46


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