Indian rupee likely to depriciate further in long term: Vijai Mantri

In a chat with ET Now, Vijai Mantri, MD & CEO, Pramerica Mutual Fund shares his views on the Indian rupee.

ET Now: We have seen some stability and strength back in the currency. Will the strength in currency stay?

Vijai Mantri: The central government has made it very clear that the current concern is inflation and not currency. They are looking at reduction in the volatility of the currency. The long term trend on the currency is of depreciation.

Unless we export more than we import, which remains a challenge, we import is completely inelastic. Even if the GDP has to grow at 4-5 %, we must continue to import. Our exports are most of the time discretionary in nature.

Today, Indian export does not have the cost efficiency because the labour cost has gone up in last couple of years, interest rate is high and real estate cost is very high.

Unless these manufacturing challenges are addressed, we cannot keep funding the gap on infinite basis. Even if we continue to get funding from NRI money or FDI or FII money, we will have to repay it within a span of two to four year down the line.

The currency will continue to remain under pressure. The short term measure taken by the central bank has brought some amount of stability.