May 13, 2013, 10.23 AM | Source: PTI
The Indian curreny is seen stabilising towards the 54 mark against the US dollar soon, say experts.
This is on the back of expected low inflation numbers coming next week and stabilising global economy, they say.
"Our growth story is intact, which is clearly visible from the sustained capital inflows from overseas, not only in the equity side but also in the debt side.
"Also, markets are expecting low inflation numbers on May 14. These factors are likely to stabilise rupee back to the 54-54.30 level," IDBI Bank Head (Treasury) N S Venkatesh told PTI from Mumbai.
He said strong US job data is also an indicator that global economic scenario is improving, which in turn will prove good for India's exports and in the long run help in bringing down the current account deficit (the difference between inflow and outflow of foreign currency).
The rupee fell to an over one-month low of 54.80, a whopping 55 paise loss, on Friday at the Interbank Foreign Exchange (Forex) market due to dollar strengthening overseas tracking favourable US job data and oil-related forex payments by Indian refiners.
This was on a day when the BSE benchmark Sensex breached the 20,000 level.
First Rand Bank's Treasury Head, K Hariharan said this trend of rupee falling despite firm equities and global trend is "contradictory" on the onset but if looked at closely, it is backed by weak numbers.
"A huge trade deficit and IIP falling to two-decades low last fiscal have been a dampener for the forex market," he said.
Also, the local currency came down by Rs 3.50 against the dollar in the forwards (futures) premium market last week, which shows it is also hitting its value in the spot, or day-to-day, trade, Hariharan added.
Hariharan, however, said the rupee will broadly move in a range of 54-55 this week on demand for commodities coming down in the global markets.
Last week, investment banking major Goldman Sachs, in a report, had said that the pressure on rupee is lessening with easing of inflation and improving growth trends.
It said the local currency could appreciate to about 52 levels to the dollar in the next 12 months.
Foreign institutional investors have pumped in nearly $13 billion into local equities so far this year.
Venkatesh of IDBI said this trend is expected to continue and that FIIs would maintain their exposure to domestic equities in the wake of removal of the withholding tax in the Budget for this fiscal.