Rupee has done well recently, but the rally is over: Expert Poll

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A poll was conducted among 30 currency strategists in the first week of June about the status of Rupee against other national currencies. The experts have opined that Rupee has been the best performing Emerging Market Currency in the recent times, surpassing the Chinese Yuan. But the rally of Rupee is all but over and it may remain at the same level,may be a bit lower against dollar after a year from now, said the experts.

The poll conducted by Rueters goes against the current belief that the currency may do even better surrounded by the positive buzz for the new government, reduced current account deficit, and other investor friendly decisions expected from the new government. The Rupee hit a one year high of 58.25 against dollar on the 22nd of May, it may move around 59.20 in the next three moths and will by all probability trade at 60.16 in a year, said the most optimistic experts in the poll.

“Much of the rupee’s gains in May (were) driven by post-election optimism via portfolio flows into both equities and Indian government bonds,” wrote Derek Halpenny at BTMU, who is expecting the rupee to trade at 59 per dollar in a year. Week economic growth, which stood at 4.6% in the first quarter of the year, is one major reason which will hold the rupee down. The probable end to US stimulus programs by this year end will be another strong detractor for the rupee, said the experts.

Comparatively, the Chinese Yuan has been the worst performing currency of the emerging markets this year. But it may do better in the coming year, reaching 6.07 against the dollar, from the current 6.25, predicted the experts.

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