Nirmal Bang says right time to go long on rupee at 51
Nirmal Bang has come out with its report on currency. According to the research firm the level of 51 is a good level to go long in USDINR pair for a target of 54.00-55.00 by the end of FY12.
November 28, 2011 / 12:13 IST
Nirmal Bang has come out with its report on currency. According to the research firm the level of 51 is a good level to go long in USDINR pair for a target of 54.00-55.00 by the end of FY12.
The Rupee at 50 seemed to be a distant possibility not too long ago. Believe it or not, today rupee is hovering around 52 against the US dollar. First, the deteriorating external environment drove investors to the US dollar as a flight to safety, hitting almost all the Asian currencies. The depreciation in rupee accentuated when the weakening domestic environment in the form of widening current account deficit, coupled with a rising fiscal deficit came to the fore. In the wake of an impending global slowdown and weak fundamentals at home, nothing augurs well for the rupee in the months ahead. This analytical piece is an endeavor to compile a mix of external and internal factors, which we believe would continue to push the Indian rupee northward to around the 54.00-55.00 levels in FY12.Twin Deficits Worrisome: A widening current account deficit and higher fiscal deficit (known as twin deficits) have raised serious macroeconomic concerns for India. These can be attributed as one of the underlying for the sharp fall in the Indian rupee. Though the government is still eyeing the targeted fiscal deficit of 4.6 for FY12, it looks over ambitious, considering the shrinking tax revenues and lesser proceeds from the disinvestment process. It looks very likely that the fiscal deficit for FY12 would hit the psychological mark of 5 percent of GDP. On the trade front, the dwindling consumption in the developed world has already started showing slippages in India
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