The rupee
is seen sliding to 75 per dollar by year-end, according to median of 10
analysts surveyed by Bloomberg.
The rupee
has fallen for six straight months in the longest stretch since 2002
Story Highlights
·
Rupee
has fallen for 6 straight months in the longest stretch since 2002.
·
The
rupee fell 0.4% on Tuesday to a record low of 74.39 per dollar.
·
The
Indian currency is seen sliding to 75 per dollar by year-end.
The worst
run of rupee losses in 16 years is set to extend. Only this time, the declines
might not be triggered by oil but by the surprise move by India's
central bank to hold rates despite the currency's free fall.
The
rupee, which has fallen for six straight months in the longest stretch since
2002, is seen sliding to 75 per dollar by year-end, according to median of 10
analysts surveyed by Bloomberg. The December-end estimate has inched up from 69
at the start of September.
Reserve Bank of India Governor Urjit Patel's
comments Friday that the rupee's drop is moderate in comparison to emerging
market peers and that the central bank doesn't have any target in mind unnerved
investors who were expecting the authority to boost its defense of Asia's worst-performing major currency. The rupee
fell 0.4 percent on Tuesday to a record low of 74.3950 per dollar.
"Governor
Patel has effectively left the rupee out in the cold and insinuated that it is
not his job to determine the appropriate level for the currency," said
Charlie Lay, an analyst at Commerzbank AG in Singapore. "RBI has seemingly
opened the floodgates for further rupee weakness."
The rupee
fell past the 74 to a dollar mark for the first time soon
after the RBI's decision, and analysts, whose year-end estimates have been
obliterated by the meltdown, cut their targets further. Skandinaviska Enskilda
Banken AB said the rupee could test 75 in the near term while ING Bank NV said
the bank's recent downgrade to 75 wasn't enough.
To
be sure, the RBI has for long maintained that it steps in only to curb undue
volatility and doesn't target any currency level. That stance places the
authority behind counterparts in Indonesia and the Philippines, which have been
actively supporting their currencies, Madhavi Arora, an economist at Edelweiss
Securities Ltd., wrote in a note Tuesday.
"We
expect the weakness to persist, with the rupee heading toward 75-plus levels
against the dollar, unless some additional assertive policy steps come
through," she said.
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