The Indian rupee will hover near record lows against the dollar for the next month or so, but a further significant fall is unlikely following a near 10 percent slide in the currency since February, a Reuters poll shows. Indeed, the currency is expected to appreciate gradually after June to around 50 per dollar by March 2013, the poll of more than 20 respondents shows.
The Indian rupee recovered on Friday after earlier dropping to its third consecutive daily record low, tracking a recovery in domestic stocks and after a central bank deputy governor said the Reserve Bank of India would continue to defend the currency.
The USD/INR settled at 54.42/44 per dollar on Friday compared to Thursday's close of 54.48/49, according to State Bank of India closing data. It was trading at 53.70 per dollar on Tuesday after hitting a record closing low on Monday of 53.96/97 and a record low in December of 54.30.
The median forecasts in the poll show that the rupee is expected to be trading around 53.41 at the end of June, 52.61 at the end of September, 51.50 at the end of December and 50.00 at the end of March 2013. "To see a more meaningful and sustained downtrend emerge in dollar/rupee, either credible fiscal and balance of payments policies need to emerge in India," said Paul Mackel, head of Asia FX strategy at HSBC in Hong Kong.
Or, the dollar needs to turn lower broadly, although that is unlikely because investors are currently risk averse, which supports the dollar, he said.
The rupee has fallen nearly 10 percent since its 2012 peak in February due to concerns about India's current account and fiscal deficits.
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