As per the recent reports by the Deutsche Bank, the Indian rupee rate is likely to hit another low falling to Rs 72.5 to the dollar by the end of this year.
“Allowing the rupee to depreciate in line with other emerging market currencies will not only help maintain export competitiveness but also lead to a further easing of monetary conditions, which may be seen as necessary to offset risks to growth.”
Indian rupee rate may further decline to 72.5 level by 2017 end
Further, it is anticipated that the dollar will be strengthened by the Federal Reserve in 2017 which will further weaken the other currencies as compared to the dollar. It also said, “We think the case for further rupee depreciation remains in place, despite a constructive balance of payment position. It seems to us that the rupee would also likely breach 70 next year and head towards 72.5 by the end of December 2017, which will erase some of the appreciation of the Real Effective Exchange Rate (REER) and help maintain India’s export competitiveness against the other emerging market peers.“
The analysts at the Deutsche Bank are of the view that even if the Reserve Bank of India intervenes and tries to stabilise the rupee, it would not bring the desired result and the Indian currency will still go on depreciating as the US dollar is supposed to get strengthened in the next few months.
Recently, the interest rates were cut down in the economy due to the scrapping of the old notes of denomination 500 and 1000. And this, in turn, led to a fall in rupee. The Indian rupee has been hit hard by PM Modi’s demonetisation move and US President-elect Donald Trump’s fresh regimes.