INSUBCONTINENT EXCLUSIVE:
Few analysts argue the rupee's weakness is a deliberate attempt by the RBI to boost exportsBengaluru: The rupee will not recover lost ground
in the coming year, according to a poll of currency strategists by news agency Reuters who are more pessimistic than last month amid doubts
over any kind of trade truce between the US and China.Most emerging markets currencies have depreciated against the US dollar, hurt by the
tit-for-tat trade war between the world's two largest economies, and there are scant signs of a resolution anytime soon.Also weighing on the
currency's outlook, the Reserve Bank of India has cut its key interest rate by 135 basis points so far this year to support a slowing
Domestically, the tide has turned rough for the INR, led by tapering of domestic growth optimism and fiscal worries - all weighing on the
rupee's way forward," Madhavi Arora, lead economist, FX and rates at Edelweiss Securities said."After December's rate cut reforms in the
banking sector and strong infrastructure investments are needed in addition with monetary stimulus to help growth and the rupee."The
December 2-4 poll, taken before the monetary policy committee's announcement on Thursday, showed the currency would weaken 0.6 per cent to
72.00 per dollar in a year from 71.57 where it was trading around on Wednesday.The year ahead outlook was the most the pessimistic for the
rupee since October.Over the coming year, 23 of 51 strategists expected the rupee to breach 72.40 against the dollar - its weakest trade
Six of those expected it to weaken beyond its lifetime low of 74.48 per dollar.But a few analysts argued the rupee's weakness was a
deliberate attempt by the RBI to boost exports that have been on a downward trend."There is a conscious effort by the RBI to provide a
depreciation bias to the rupee
That could probably become a new norm for at least some time, so the export sector slightly benefits," said Upasna Bhardwaj, senior
economist at Kotak Mahindra Bank."The pace at which the RBI has been buying dollars clearly signals a new policy the RBI is adopting
Its bias for a relatively weaker currency will determine its direction
This is an unsaid policy obviously, but through actions like dollar purchases it is suggestive of that."
