See no hike in Dec policy; Re to end yr at 63/$:Deutsche Bk

Taimur Baig, Deutsche Bank expects Reserve Bank of India (RBI) to maintain a status quo in the December monetary policy.

He finds the effective cost of borrowing from the central bank lower since Raghuram Rajan took over as RBI governor. The provision of liquidity, whether it is repo facility, term-repo facility or the Marginal Standing Facility (MSF), have seen some easing take place;  both in the form of rate as well as the quantity of liquidity that is available. “I think the RBI is trying to have it both ways, on one hand to sound hawkish about inflation but do relatively neutral or dovish steps. I cannot see December being a turnaround there. So my base line is no move in December unless we get a couple of ugly cnsumer price index (CPI) and wholesale price index (WPI) numbers,” he adds On the WPI front, he expects it to be around 6.7-6.9 percent. The rupee clearly is in for a bit of a rough ride as most emerging market currencies given that taper related discussion is reaching a frenzy. Sell-off in the rupee will continue if global market volatility persists, says Baig. His year-end forecast for rupee is 63/USD. “We think that whether or not taper takes place, there will be again a risk-on wave as the year comes to end, and that would help the rupee,” he adds.