INSUBCONTINENT EXCLUSIVE:
The rupee outperformed Chinese yuan, and tech-reliant currencies of Taiwan dollar and Korean wonThe rupee, Asia's best-performing currency
this year, is going to slide right back to levels last seen in the depths of the pandemic meltdown, according to Parul Mittal Sinha at
The currency will drop toward 76.5 to a dollar -- about 4.4 per cent weaker than current levels -- by the end of the year, said the head of
macro trading, India and South Asia financial markets
That is the most bearish forecast seen among analysts surveyed by Bloomberg, and runs counter to expectations for it to stay strong.The
rupee is a surprise winner in Asia this year as expectations of an economic recovery, a rare current-account surplus and massive foreign
inflows have shielded it from the impact of rising United States yields
It has outperformed the Chinese yuan and the tech-reliant currencies of Taiwan dollar and the Korean won, which had all been forecast to
keep gaining as the global economy rebounds."We expect the rupee to weaken in FY22 amid higher commodity prices, normalizing imports,
increasing inflation, and continued central bank intervention," said Ms Sinha, who has spent more than a decade trading currencies and rates
in London, Singapore and India.The executive, who joined StanChart from Deutsche Bank India in 2019, sees the rupee losing some of its
The current account will probably swing to a deficit in the fiscal year starting April, from an estimated surplus of 1.9 per cent of gross
domestic product in the current period as imports gain.Higher oil prices will hurt, she said.The currency also looks overvalued at current
levels, according to Sinha
Its real effective exchange rate is close to multi-decade highs, she said, adding that market positioning is also long rupee, in contrast to
regional peers.The rupee has advanced about 0.5 per cent in March to 73.1125 per dollar
It pared most of the month's gains due to a 1.2 per cent slide on Tuesday, as state banks rushed to buy dollars ahead of the fiscal-year
The median estimate in a Bloomberg survey is for it to trade around the 72.13 levels by end December.One key factor that drove the rupee's
2.3 per cent losses in 2020 -- it was the region's worst performer -- was an almost relentless accumulation of foreign-exchange reserves
by the Reserve Bank of India
It bought a net $88 billion of forex in the spot market last year, central bank data showed.The pace will be slower in the next fiscal year,
Valuation-adjusted FX asset accumulation has dropped to $4 billion this quarter from $31 billion in the previous three months, she said.The
RBI has no internal target on forex reserves, Governor Shaktikanta Das said last week, while reiterating the central bank's aim to keep
the rupee stable.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated
