Nomura sees Re at 42.6 against dollar by FY'11-end

MUMBAI: The Indian rupee is likely to strengthen to 43.1 a dollar by December and 42.6 by FY'11-end, a global financial services group today said.

"We are bullish on currency and the rupee is likely to be at 43.1 level by December," Nomura Vice-President, India Economist Fixed Income Division, Asia Pacific Sonal Varma told reporters here. By FY'11, the rupee is likely strengthen further to 42.6 level, she added.

The Indian unit today appreciated by 2 paise to Rs 44.34 a dollar, weighed down by the greenback's gain against other Asian currencies.

On GDP, Nomura India President and CEO Vikas Sharma pegged the growth at 8.3 per cent in FY'11.

On inflation, he said it is likely to dip marginally to 8 per cent as the price momentum is picking up. However, with the nearing of harvest season food inflation will lower.

WPI inflation rose slightly above expectations to 8.62 per cent in September from 8.51 per cent in August.

"We expect the Reserve Bank of India to keep rates on hold in November, as the inflation has come off to high single digits and is likely to come off further as the harvest season nears and we expect a slower growth momentum," Sharma said.

He predicted that the industrial production would be lower at 8.3 per cent in FY'11 compared to 10.4 per cent in FY'10.