Danske Bank Opposes Rupee Bulls
Danske Bank’s chief analyst, Allan von Mehren, holds a contrarian view on the Indian rupee, opposing the prevailing sentiment of rupee bulls. He anticipates the rupee to steadily weaken against the US dollar, with a projected decline to 83.60 per dollar by December.
This forecast contrasts with the median projection of 82.80 per dollar in a Bloomberg survey.
One of the key factors driving Mehren’s forecast is the Reserve Bank of India’s (RBI) expected strategy to allow the rupee to depreciate gradually. This approach is aimed at aiding local manufacturers in combating higher inflation and supporting export competitiveness.
Despite the anticipated depreciation, the rupee remains one of the least volatile currencies globally, largely due to the RBI’s vigilant oversight. This stability has bolstered the attractiveness of Indian assets, particularly amid a year marked by significant turbulence in global foreign-exchange markets, largely attributed to a strengthening US dollar.
The rupee’s resilience is evident in its performance relative to other Asian currencies, such as Thailand’s baht and South Korea’s won, both of which have depreciated by over 5% against the dollar this year. In contrast, the rupee has remained relatively stable, closing marginally unchanged at 83.28 against the dollar on Wednesday, following a brief dip to an all-time low of 83.5750 the previous month.
