INSUBCONTINENT EXCLUSIVE:
The worst run of rupee losses in 16 years is set to extend
Only this time, the declines might not be triggered by oil but by the surprise move by India's central bank to hold rates despite the
currency's free fall.The rupee, which has fallen for six straight months in the longest stretch since 2002, is seen sliding to 75 per dollar
by year-end, according to median of 10 analysts surveyed by Bloomberg
The December-end estimate has inched up from 69 at the start of September.Reserve Bank of India Governor Urjit Patel's comments Friday that
the rupee's drop is moderate in comparison to emerging market peers and that the central bank doesn't have any target in mind unnerved
investors who were expecting the authority to boost its defense of Asia's worst-performing major currency
The rupee fell 0.4 percent on Tuesday to a record low of 74.3950 per dollar."Governor Patel has effectively left the rupee out in the cold
and insinuated that it is not his job to determine the appropriate level for the currency," said Charlie Lay, an analyst at Commerzbank AG
"RBI has seemingly opened the floodgates for further rupee weakness."The rupee fell past the 74 to a dollar mark for the first time soon
after the RBI's decision, and analysts, whose year-end estimates have been obliterated by the meltdown, cut their targets further
Skandinaviska Enskilda Banken AB said the rupee could test 75 in the near term while ING Bank NV said the bank's recent downgrade to 75
wasn't enough.To be sure, the RBI has for long maintained that it steps in only to curb undue volatility and doesn't target any currency
That stance places the authority behind counterparts in Indonesia and the Philippines, which have been actively supporting their currencies,
Madhavi Arora, an economist at Edelweiss Securities Ltd., wrote in a note Tuesday."We expect the weakness to persist, with the rupee heading
toward 75-plus levels against the dollar, unless some additional assertive policy steps come through," she said.(Except for the headline,
this story has not been edited by TheIndianSubcontinent staff and is published from a syndicated feed.)
