Rupee will climb 45 against dollar by year end: RBS
By siliconindia   |   Friday, 23 July 2010, 22:39 IST
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Mumbai: By the end of this year rupee will go up to 45 against the dollar. Highlighting this, Royal Bank of Scotland (RBS) has suggested investors to buy the Indian rupee as rising interest rates will lure overseas funds and help the higher yielding currency value almost 5 percent by December. The rupee has depreciated because of concerns arising out of inflation and current account deficit. These are only short term concerns and capital flows will take care of the current account deficit, said Ramit Bhasin, Managing Director and Head - Markets, India, RBS, while releasing a client's survey launched by RBS. "The rupee at the current level looks very cheap and we are advising our clients to be long on the currency," he added. According to the survey, around 80 percent of the respondents expect a 25-basis rate hike in both repo and reverse repo rates. Nearly 25 percent respondents expect a 25-basis point hike in CRR in the policy. More than half of the participants expect the rupee to touch 46 by December and 45 by March 2011. While the survey expects repo to touch 6 percent and reverse repo to touch by 4.5 percent by December 2010, RBS' view is that repo to touch six percent by December and reverse repo to touch 5 percent. Net capital flows into the nation's stocks reached 407 billion rupees this year ($8.6 billion), about half of the record 834.2 billion rupees in 2009 when the benchmark share index's biggest advance 18 years attracted foreign investors. The government estimates the economy will expand 8.5 percent in the year to March 31, the fastest pace in three years. The International Monetary Fund this month raised its 2010 economic growth forecast for India to 9.4 percent from the 8.8 percent estimated in April.

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