The Indian Rupee could plummet to 70 against the US Dollar in a month according to a report written by Deutsche Bank. The dismal forecast comes a day after the stricken Rupee tumbled to a new record low of 64 per Dollar.
Several analysts had predicted that the Indian currency would trade between the 65-70 levels so the Banks report is not a surprise. The problem is however that those previous forecasts saw the Rupee decline over several months, not days as has been the case recently. Since the 22nd of May when the US Federal Reserve first hinted that it is considering tapering its monetary easing programme the Rupee has plummeted by 15%.
“We continue to believe that fundamentally the Rupee is undervalued and has overshot its equilibrium level substantially, but as numerous episodes of past currency crises have amply demonstrated, under a scenario of deep pessimism, currencies can overshoot substantially and remain so for a long time. India we fear is entering such a zone,” said economists at Deutsche Bank in its report.
In an attempt to halt the Rupees rapid decline the Reserve Bank of India revealed on Tuesday that it was planning to buy long-dated government bonds worth ₹80 billion through an open market operation on the 23rd of August, it added that it would then decide on further measures as warranted.
Analysts said that the Bank’s move should help to allay fears over liquidity but could also help the Rupee. Other economists however are calling on the Bank to focus on stabilising the Rupee and prevent it from tumbling further.
Depending on the outcome of this evenings Federal Reserve minutes report the Rupee could go either way, a strong suggestion that the Fed will taper as soon as next month is likely to send the currency tumbling further.
Current Rupee (INR) Exchange Rates:
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 100.2994 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 85.7362 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 64.0208 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 57.6962 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 50.5849 >
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