Rupee tipped to remain volatile in 2013

Posted By: Religare
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Rupee tipped to remain volatile in 2013
65.440United States Dollar
The rupee's dismal run continued in 2012 with the Indian currency emerging as one of the worst performing global currencies this year despite the Reserve Bank of India and government's best efforts to stem the sharp depreciation in the rupee.

The Indian rupee swung wildly by over 18 per cent in 2012 and hit-it's all time low of 57.12 against the US dollar in June this year.

While sustained dollar demand and rising global risk aversion amid Europe's debt turmoil were blamed for the rupee's free fall this year, worries over India's widening current account deficit and fiscal deficit may have also contributed to the currency's woeful performance in 2012.

Even the government's slew of economic reforms has failed to have a major impact on the rupee.

"The domestic currency moved in a wide range of 49 to near 58 levels, with maximum volatility in the 52-56 zone," Dhanlaxmi Bank Executive Vice- President (Treasury) Srinivasa Raghavan said.

The rupee, whichpresently stands at 54.77 against the US dollar, has fallen 2.73 per cent this year thus far.

While experts predict the volatility in the rupee to continue in 2013, the Indian currency is tipped to gain some strength in the second half of next year.

The rupee is expected to move in the range of 50-57 against the US dollar in 2013.

Among the factors that might influence the rupee's course next year would be the solution to the Eurozone debt crises and the US fiscal cliff, which are expected to be resolved by the end of the first half of 2013.

Government measures to narrow the fiscal and trade gap, pickup in economic growth and interest rate cuts by the RBI may support the rupee next year.

Read more about: currency, dollar
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