 "BS poll: FDI reforms to help rupee gain")
Median forecasts from 10 currency experts, collated by Business Standard, shows the rupee is expected to trade at 58.75 in a month’s time. It ended at 59.39 on Friday compared with Thursday’s close of 60.20. It had opened at 60.02 a dollar, also the day’s low. During day trade, it touched a high of 59.21 on Friday.
This month, the rupee touched an all-time low in intra-day trade at 60.77, due to heavy month-end dollar demand from importers, fall in most Asian currencies and continued selloff by foreign institutional investors in domestic markets. Taking into consideration the Friday’s close, the rupee has gained by 138 paise in the last two days.Since the start of this quarter, if we consider the all-time low, the rupee has weakened by 12 per cent.
However, it rupee recovered on the back of a narrower current account deficit (CAD) in the fourth quarter of 2012-13. This deficit had dropped to $18.1 billion or 3.6 per cent of gross domestic product (GDP) in the quarter ending March 31. In the quarter ending December 31, it had risen to a historically high level of $32.6 bn or 6.7 per cent of GDP. “The CAD might rise from here but this may not be significant. Besides, the Reserve Bank will take steps to ensure the rupee doesn’t weaken. They can come up with steps to curb its volatility against the dollar. I also expect the government to take steps towards increasing FDI,” said the treasury head of a public sector bank.
The rupee found support on Friday after US Federal Reserve downplayed the notion of an imminent end to its bond-buying programme, known as the third round of quantitative easing. Besides, there was dollar selling by banks and exporters, which helped the rupee. “The Fed will pull back the stimulus some time and the market has already factored that in. But it might not happen immediately, due to which the rupee will strengthen,” said a currency dealer.