Rupee May Recover To 59-61 By Fiscal-End: Report

New Delhi: The rupee, which had slumped to its life-time low of over 68 to U.S. dollar , is expected to recover to 59-61 against the American currency by the end of this fiscal, India Ratings & Research (Ind-Ra) said in a report.

The basis of Ind-Ra’s expectation of rupee appreciation is based on economic developments in the last one to two months and the likely developments in the remaining months.

“Notwithstanding the likelihood of U.S. Fed reversing the QE (quantitative easing) programme, Ind-Ra expects rupee to appreciate in the range of 8-11 per cent from its August-end 2013 level,” Ind-Ra, a Fitch group company, said in the report.

This would imply that the rupee is likely to appreciate to 59-61 against the dollar by end-March 2014, it added.

According to the report, the currency movements over January-May 2013 were more driven by fundamentals, while those over May-July 2013 were due to the outflow of portfolio investments triggered by the tapering off of U.S. Fed bond purchase programme.

Rupee Depreciation

The report further said that the sharp depreciation of the Indian currency was largely due to speculation, ballooning current account deficit, weakness in domestic economy and strengthening of the U.S. dollar.

Meanwhile, the appreciation of the domestic currency would be largely driven by the recent policy measures taken by the Reserve Bank of India, resumption of capital inflows, passage of economic reform Bills, lower current account deficit (CAD) in FY’14 and pick-up of economic growth momentum during the third quarter of this fiscal.

While the rupee was the worst-performing currency in August 2013, it became one of the best performing ones in the emerging markets in the first fortnight of September 2013, showing a 4.2 per cent appreciation against U.S. dollar between end-August 2013 and September 13, 2013, the report said.

At present, the rupee is hovering around the 62/U.S. dollar level. The local currency had depreciated to an all-time low of 68.85 on August 28.

Also Read: These are the ways NRIs Can Invest in India 7 Smart Financial Moves Before You Enter the Age of 30