7 hrs ago
Rupee May Weaken to 97, Fall Further If Level Breaks
The Indian rupee may lose value against the US dollar soon.
An analyst at Kotak Securities says it could reach 97 rupees per dollar.
If it falls below 97, it could weaken further to between 98.5 and 99.
Investors have been taking money out of Indian markets, which adds pressure to the rupee.
More expensive oil, fuel and shipping also make imports costlier for India.
High interest rates in other countries are creating another challenge.
The Reserve Bank of India may step in more often and could raise interest rates.
The analyst says India’s economic fundamentals are strong, but global conditions are making the rupee weaker.
The Indian rupee could weaken toward 97 against the US dollar soon, according to Kotak Securities’ Anindya Banerjee.
A break below 97 could push the rupee toward 98.5-99, Banerjee said.
Foreign portfolio outflows, higher import costs and elevated global yields are pressuring the currency.
Foreign portfolio investor outflows have reached about $6.1 billion this month, with nearly 90% of recent inflows reversed.
The Reserve Bank of India may increase intervention and could raise interest rates in coming months to support the rupee and contain inflation.
- Who
- The Indian rupee, foreign portfolio investors, Kotak Securities analyst Anindya Banerjee and the Reserve Bank of India are central to the report.
- What
- The rupee may weaken to 97 against the US dollar and possibly to 98.5-99 if 97 is breached.
- Where
- The currency pressure is affecting India’s foreign-exchange market amid global financial-market conditions.
- When
- The weakening could occur in the near term; Banerjee also expects possible rate hikes in coming months, including another hike in December.
- Why
- Foreign portfolio outflows, higher oil and import costs, elevated global yields and stronger demand for funds are pressuring the rupee.
Key facts
- Near-term rupee level
- 97 against the US dollar
- Further downside risk
- 98.5-99 if 97 is breached
- Monthly FPI outflows
- About $6.1 billion
- Recent inflows reversed
- Nearly 90% of inflows from the previous two months
- Main import pressures
- Crude oil, freight, diesel and aviation fuel prices
- Possible central-bank response
- More intervention and potential interest-rate increases
- Inflation focus
- Maintaining positive real interest rates
Quotes
Anindya Banerjee
Head of Research, Currency, Commodity and Interest Rate Derivatives at Kotak Securities
“Yes, the macros are rock solid, but the global pressure is on, and that is what is keeping the rupee weak, and we might see the levels of 97 very soon. If that breaks, it could go even lower from there.”
CNBC TV 18
Sources
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