17.5 C

Rupee to drop further to 84.50 against dollar by year-end: Poll

Must read


The will fall further against the U.S. dollar over the rest of the year, a Reuters poll on Thursday showed, setting up the currency for its steepest annual decline in at least nine years due to a widening domestic trade balance and surging U.S. interest rates.

The rupee slipped to a record low of 83.2150 on Thursday. It is likely to fall further to 84.50 by December, according to the mean and median forecasts of a poll of 14 bankers and foreign exchange advisors.

The South Asian currency has already tumbled about 12% so far this year, equalling its drop over the whole of 2013, when the U.S. Federal Reserve’s decision to slow bond purchases prompted a broad selloff in emerging market currencies.

The estimates in the poll ranged between 83.25 and 86, showing a broad consensus that the rupee would not recover this year.

“By December, the rupee could fall up to 85 levels, as we do not see any major changes in the external environment,” said Madan Sabnavis, chief economist at Bank of Baroda.

“The dollar is continuing to trend higher and our local fundamentals remain weak. We are expecting India’s current account deficit (CAD) at 3%-3.50%.”

The rise in the CAD comes as India runs a high trade deficit when the global economic scenario is not conducive to portfolio flows, putting the rupee under pressure.

India reported an average monthly trade deficit of $23.2 billion for the first nine months of this year, compared to an average of $15.3 billion in 2021.

Meanwhile, capital flows have been hampered by the Fed’s aggressive rate hikes to contain inflation.

The Fed’s hikes have led to a near 18% jump in the dollar index this year and has prompted investor to pull out capital from emerging market assets.

Foreign investors have taken out $23.4 billion from Indian equities and $1.4 billion from debt so far this year, according to data from NSDL.

(Reporting by Nimesh Vora; Editing by Savio D’Souza)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Source link

- Advertisement -spot_img

More articles


Please enter your comment!
Please enter your name here

- Advertisement -spot_img

Latest article