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The referendum to decide whether or not Scotland remains a part of the United Kingdom, scheduled to be held on Thursday, isn’t likely to have an impact on the rupee.
During the referendum, voters in Scotland will be posed the question, “Should Scotland be an independent country?”
“Even if the verdict is ‘yes’, it will not have an impact on the rupee, as the number of investors from Scotland isn’t high,” says N S Venkatesh, executive director and head of treasury, IDBI Bank.
On Monday, the rupee breached the 61/dollar mark, closing at a near one-month low of 61.15/dollar (it stood at 61.22 on August 13), compared with its previous close of 60.66. After opening at 60.93/dollar, it touched an intra-day low of 61.17.
Prashant Sawant, senior economist at UK-based global risk and strategic consulting firm Maplecroft, says, “An independent Scotland is likely to pursue better trade relationship with emerging countries, including India. Trade in oil & gas and manufacturing goods are some of the key common factors that will help improve India’s trade balance in the long-run.”
Some, however, believe if Scotland becomes an independent nation, the rupee will be hit. “If the verdict is ‘yes’ and they vote for separation, it will have an indirect impact on the rupee; it will have an immediate impact on the whole Euro zone. In such an environment, there might be sell-off from domestic markets. That will result in a couple of days of nervousness,” said Anindya Banerjee, a currency analyst at Kotak Securities.
Experts say a key factor for the rupee will be the outcome of a meeting of the US Federal Reserve on September 16-17. “The level of 61.5/dollar is crucial. If the rupee breaches that level, it could even weaken to 61.75/dollar,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
The key factor behind the rupee’s fall on Monday was data on industrial output for July; the data, released after market hours on Friday, showed growth in industrial production fell to a five-month low of 0.5 per cent in July.
Currency dealers said though the central bank was active in the market on Monday (through state-run banks), its intervention wasn’t significant.
