Deutsche Bank highlights five factors why the rupee should appreciate against dollar in 2H2013: 1.Falling Inflation: Inflation has been declining rapidly, pushing up real interest rates and increasing the attractiveness of investing in rupee assets. 2.Current Account Deficit (CAD): Current account is likely to correct substantially as the cost of importing gold and oil is declining, weak growth and policy measures are lowering import demand, and rising real interest rate is reducing the need to hedge against inflation through capital flight. 3.Divestment Program: Inflows outlook is broadly positive with a number of disinvestment programs in the pipeline, and a rate cut cycle, the only one in a major EM economy is likely to keep fixed income investors interested. 4.Risk Aversion: Global risk aversion and associated sell-off are likely to abate as Deutsche Bank believes the ongoing concern about the end of QE has already caused the markets to overshoot. 5.Fundamental View: From a medium-term fundamentals point of view, the rupee is appropriately valued, with both the real and nominal effective exchange rates having corrected considerably in recent years.
Posted on: Sat, 08 Jun 2013 17:27:18 +0000
Trending Topics
Recently Viewed Topics
© 2015