INSUBCONTINENT EXCLUSIVE:
The rupee is caught in a downward spiral but foreign fund managers are not panicking yet
This is because they believe that the fall in the rupee should also be seen in the context of the overall decline in emerging market
The strong GDP numbers for the June quarter announced over the weekend is giving many of them a reason to stay invested, but a lot will
depend on the outcome of the national elections scheduled next year
ET spoke to three overseas portfolio managers and a senior brokerage executive servicing foreign investors for their views
due to dollar strength rather than rupee weakness
I expect the rupee to be gradually depreciating over the medium to long term as the US dollar will continue to be strong and there will be
more tightening by the Fed
If there is a continuation of this sudden fall, the RBI may interfere at 73-mark to help the importers and halt an immediate inflation
The panic has not set in among FIIs
Their rationale has not changed on India investments
FII flows have been weak due to the sustained negative bias on Emerging markets
The macro economic data points for India among other EMs still remain quite strong.
JOHN PRAVEENMANAGING DIRECTOR, PRAMERICA INTERNATIONAL
INVESTMENTS
THE DECLINE in INR has to be seen in the broader context of depreciation of most EM currencies and stock markets in 2018
The risk for further rupee weakness remains with no resolution yet of the crises in Turkey and Argentina, oil prices remaining high, trade
tensions continuing to rise and further rate hikes by the US Fed
However, further downside from current levels is likely to be limited, given the 11 per cent depreciation of the INR thus far in 2018
domestic economic and corporate earnings fundamentals remain solid with strong GDP growth and corporate earnings expected to grow over 20
per cent.
SHIV PURIMD, TVF CAPITAL ADVISORS
WHILE THE rupee has been among the weaker emerging market currencies this year, it also needs to
be seen from the context that it appreciated by 5 per cent last year
The situation on the ground is picking up and GDP growth should improve going forward
Given an improving growth outlook and higher interest rates, the rupee should stabilise going forward
Demand on the ground is picking up after the country went through both demonetisation and GST implementation last year
As a result earnings growth should accelerate to high teens this year
Additionally, domestic flows into equity remain strong at over $10 billion year to date already
Given these trends, I expect the markets to hold up well through the year.
BRIAN JACOBSENMULTI-ASSET STRATEGIST, WELLS FARGO ASSET
South Africa and Brazil have worse political issues than India does, so it is just a matter of time before investors stop fretting about
