No Respite

There is no respite for the rupee as it breaches the 70 mark against the US dollar.

By Anand Adhikari  
Monday, September 3, 2018

There is no respite for the rupee as it breaches the 70 mark against the US dollar. There are estimates of the rupee remaining at the 69 to 70 level because of weaker external parameters; the trade deficit is a big worry because of oil imports. The current account deficit (CAD) is expected to touch 2.8 per cent GDP in 2018/19, which was less than 1 per cent two years ago. The rising interest rates in US and later in the Euro zone will bring more trouble for rupee.

With inflation above the comfort zone, there are expectations of an interest rate hike to provide some cushion. The RBI is already following a calibrated approach by intervening in the forex market to reduce high volatility. The long-term outlook for the rupee, however, doesn't appear encouraging.

Anand Adhikari

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