Rupee May Return Near Pre-Pandemic Levels by March, Nomura Says
The Indian rupee is set to recover by March to levels seen before the coronavirus pandemic, thanks to a rare current account surplus and expectations that the central bank may be more tolerant of a stronger currency, according to Nomura Holdings Inc.
Nomura expects the rupee to bounce back to 72 per dollar by end-March, a level last seen in February. It sees sluggish oil prices to act as a tailwind for the net oil-importing nation, setting it on course to record its first current-account surplus since 2004.
“We see the rupee as an outperformer versus other high yielders,” said Dushyant Padmanabhan, strategist at Nomura Holdings in Singapore. The rupee is “placed quite well – the balance of payment improvement has been quite dramatic, and continues to benefit from the recent drop in oil prices.”
India’s currency rose from a two-month low last week ahead of U.S. election results to 74.3725 per dollar on Wednesday. The rupee is Asia’s worst performer with a year-to-date loss of 4%. Traders have blamed heavy currency intervention by the Reserve Bank of India, though the nation’s economic outlook has also been blighted by the region’s biggest virus outbreak.
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