Rupee To Weaken ToThe battered rupee will take another bruising this year, despite a recent revival, weighed down by uncertainty around general elections in May and an expected economic slowdown, a Reuters poll found.
While the currency recovered nearly 6 per cent after touching a record low of 74.485 per dollar on October 11, the January 2-8 poll of more than 65 analysts showed the rupee will weaken again.
However, fewer than 20 per cent of contributors in the latest poll expected the rupee to breach that all-time low in the next 12 months, compared to nearly 50 per cent in a November survey and about one-third in December.
After falling about 9 per cent in 2018 – its biggest decline since Prime Minister Narendra Modi took office in 2014 – the currency was forecast to weaken 1.9 per cent to 71.50 per dollar in a year, from about 70.20 on Tuesday.
Two-thirds of those who gave a year-ahead forecast predicted the currency to be weaker – trading at more than 70 per dollar, with the most pessimistic call at 80. The others either had it around where it is now or a touch stronger.
“Overall there’s nothing to be greatly optimistic about the rupee. There are lots of uncertainties, both on economic and political fronts lingering as we enter into 2019,” said Prakash Sakpal, Asia economist at ING, adding that elections and political uncertainty pose “the biggest risk”.
“Things could go either way. We might see the BJP (Bharatiya Janata Party) retaining its power by a very thin margin. On the other extreme, there could be a coalition. This would obviously not be viewed by the international community positively, which of course is going to be bad for the currency,” Mr Sakpal said.