The Indian rupee’s top two forecasters are at odds as to how vulnerable the world’s fastest-growing major economy is to outside shocks.
HDFC Bank BSE 0.29 % Ltd., which had the most accurate estimates in Bloomberg’s quarterly rankings, sees US Fed Reserve policy tightening driving a 2.5 percent decline in the currency to 68.50 per dollar by March 31, from 66.81 on Monday. NABL (National Australia Bank Ltd.), placed second, says the rupee will strengthen to 66.20 as economic growth and a reducing current account deficit help offset any outflows from emerging markets.
“The rupee could take a bit of beating along with other senatorial currencies,” said Tushar Arora, HDFC’s senior economist for treasury based near New Delhi. The Federal’s Dec decision “could lead to uncertainty in global financial markets and a risk-off episode,” he said.
HDFC’s view the INR will weaken toward its record low of 68.845 set in August 2013 was bolstered Thursday when the currency slid the most in 3 months after Fed minutes boosted the case for higher US rates. India’s currency strengthened 1.4% in the third quarter, the most in two and a half years, and National Australia Bank says foreign investors will keep buying.
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