Westpac says the rupee could enjoy a positive start to 2013 as the recent rebound in factory output, PMI data, along with equity market resilience is pointing towards a better growth environment for India through first half of 2013.
"Combined with a likely RBI rate cut in the early part of Q1 and we suspect the market will feel more comfortable in a rebound in growth," says Westpac in a note.
Any rate cut will encourage further capital inflows, and will provide positive back drop for dollar/rupee view of 53.8 for end March, the note says.
January has been a historically much better month for Asian currencies compared with May, June and August, says Westpac. In fact, historical data shows rupee has the best mean return for January (0.83%), followed by THB and IDR.
The RBI is unlikely to curb any INR strength unlike other Asian peers. Any jump in dollar/rupee between now and end of the year can be viewed as an opportunity to sell, it says.
