Kamath tells firms to gear up for strong Rupee

ICICI CEO K V Kamath today warned that the rupee would strengthen by 1 or 2 against the dollar each year, irrespective of whatever was done to check the rising Indian currency.

"It will be appropriate for us to plan for a strong rupee," said Kamath at a summit on manufacturing in Mumbai today.

''We can wish it away, but the rupee will keep strengthening by Re 1 or Rs 2, irrespective of whatever we do,'' said Kamath, addressing the sixth manufacturing summit organised by the Confederation of Indian Industry (CII).

''So, you got to plan for the best-case and worst-case scenario. The good thing is you have notice on your side,'' said Kamath, reminding manufacturers the way the Japanese industry responded to an appreciating yen, which moved from 200 to the US dollar to 100-120 levels to the US dollar.

''You can balance the risk of a strong rupee through globalisation, market diversification, market hedging and incremental efficiency. By doing so, you can offset the impact of the rising rupee,'' said Kamath.

He said the US dollar was weakening against all currencies and not just the rupee, while the rupee was appreciating as the Indian economy and industry got more competitive.

Kamath said he would not predict interest rates, but said that liquidity was good, indicating that interest rates should come down in the near future.