Rupee to average at 38 per dollar in 2008: Citigroup
Rupee is likely to remain strong against the US currency and may average at 38 to a dollar in 2008, although strong lobbying by exporters and pre-election political compulsions might lead to some moderation in its appreciation, according to global...
By PTI |
NEW DELHI: Rupee is likely to remain strong against the US currency and may average at 38 to a dollar in 2008, although strong lobbying by exporters and pre-election political compulsions might lead to some moderation in its appreciation, according to global financial giant Citigroup.
"Rupee appreciation is likely here to stay but the possible imposition of various controls could result in trends not being uni-directional," Citigroup said in a report.
"In 2008, we expect the USD/INR to average Rs 38 per dollar," Citigroup's India analyst Rohini Malkani said.
With capital flows continuing, liquidity management is likely to remain a dilemma for the authorities, the report, titled 'India in 2008- A Year of Priorities', noted.
The options for the Reserve Bank of India would be either to let the rupee appreciate or mop up the additional dollars. Despite the rupee appreciating over 12 per cent in 2007, this year could see some slowdown because of pre-election issues and vociferous lobbying by exporters.
"We expect a moderation in the pace of appreciation to around five per cent in 2008. However, this would entail mopping up of dollars, which would result in an increase in domestic liquidity," Malkani said.
In a bid to stem the appreciation in the rupee, the government had taken various measures in 2007 such as tightening the norms for external commercial borrowings, encouraging dollar outflows and the Participatory Note proposals.
"Rupee appreciation is likely here to stay but the possible imposition of various controls could result in trends not being uni-directional," Citigroup said in a report.
"In 2008, we expect the USD/INR to average Rs 38 per dollar," Citigroup's India analyst Rohini Malkani said.
With capital flows continuing, liquidity management is likely to remain a dilemma for the authorities, the report, titled 'India in 2008- A Year of Priorities', noted.
The options for the Reserve Bank of India would be either to let the rupee appreciate or mop up the additional dollars. Despite the rupee appreciating over 12 per cent in 2007, this year could see some slowdown because of pre-election issues and vociferous lobbying by exporters.
"We expect a moderation in the pace of appreciation to around five per cent in 2008. However, this would entail mopping up of dollars, which would result in an increase in domestic liquidity," Malkani said.
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In a bid to stem the appreciation in the rupee, the government had taken various measures in 2007 such as tightening the norms for external commercial borrowings, encouraging dollar outflows and the Participatory Note proposals.
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