Modi effect: Rupee best performing Asia-Pacific currency in 2014 - The Times of India
NEW DELHI: Boosted by capital inflows and euphoria around the incoming government, rupee's surge to 11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.
With a gain of about 5.3 per cent since the start of this year, rupee has sprinted ahead of its other Asia-Pacific peers, including Indonesia's rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various currencies vis-a-vis the Greenback.
The rupee, which closed at 58.52 levels against the US dollar on the last trading day on Friday, has incidentally seen a lion's share of 5.3 per cent gain in the past one month.
The Indian currency stood at Rs 61.8 level per US dollar at the start of 2014 and has recorded a gain of 327 paise in less than six months, partly helped by robust foreign fund inflows. This marks a major turnaround since August last year when rupee touched its lifetime low of 68.80.
"...positive sentiments out of the election results enabled us to upgrade our FII flows estimates by $5 billion to $20 billion, implying an overall BOP (balance of payment) surplus of $29 billion. We expect the dollar/rupee range to be 57-61 in FY2015," said Indranil Pan, chief economist of Kotak Mahindra Bank, in a report.
Under the leadership of its prime ministerial candidate Narendra Modi, BJP has recorded an unprecedented victory in the recently held Lok Sabha elections and the Gujarat strongman will be sworn in as Prime Minister on May 26.
The highest-ever tally in the Lok Sabha elections has helped BJP secure a majority on its own, thus raising hopes of big-bang reforms to revive the economy.
In Asia-Pacific, the rupee's gains versus the US dollar are followed by the Rupiah (Indonesia) that has appreciated 4.6 per cent, New Zealand dollar's 3.75 per cent rise and Australian currency's 3.5 per cent rise.
The Yen (Japan), the Won (South Korea) and the Ringgit (Malaysia) have gained between 2-3 per cent in this calendar year so far.
Philippines Peso has appreciated 1.6 per cent against the US dollar, followed by 0.5 per cent uptick in Thailand's Baht and Singaporean dollar. While the Hong Kong dollar is almost unchanged since 2014 started, the Taiwan dollar and Chinese Yuan have lost value.
Some analysts, however, feel that the Indian rupee faces risk of some depreciation after its recent strong show.
"While Indian rupee is expected to depreciate slightly against the $from current levels (we pencil dollar/rupee to hover around 60 for this fiscal year), we expect it to gain against Yen and Swiss Franc," said a report from ICICI Bank Treasury Research Group.
Banking on Modi, foreign investors to pour $60 billion into India: Study - The Times of India
NEW DELHI: Foreign investment inflows are estimated to more than double to $60 billion level this fiscal as overseas investors repose confidence in Narendra Modi-led government that is expected to unleash big-bang reforms to reboot the economy, says an Assocham study.
"Riding on huge expectations from the incoming Modi government, global investors are gung ho on the Indian economy which is expected to witness over 100 per cent increase in foreign investment inflows — both FDI and FIIs — to above $60 billion in the current financial year as against $29 billion during 2013-14," the study projected.
The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014-15, are expected to even overtake the figure of $46.17 billion during fiscal 2012-13, one of the best years for overseas investment inflows, it estimated.
"The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now," Assocham president Rana Kapoor said.
However, the emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee rate and inflation from the increased liquidity into the system.
The new finance minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance, Assocham said.
In the current fiscal, the FII investment would remain more than the FDI inflows, Assocham said. The expectations are that FII investment in both debt and equity could exceed $35 billion while the FDI money could be above $25 billion.
"If the Modi government is able to take some reforms-friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things will move on from there," Kapoor said.
Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, the study found.
Besides, as the new government goes about removing obstacles in investment, FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy, the study said.
Rupee may surge 35% to 40 per dollar if Modi becomes Prime Minister, Citigroup's Adam Gilmour says - The Times of India
Rupee may surge 35% to 40 per dollar if Modi becomes Prime Minister, Citigroup's Adam Gilmour says
A victory for the Bharatiya Janata Party in next month's general elections is seen powering the rupee to highs last reached in 2008.
Polls show the BJP, which has projected Narendra Modi as its prime ministerial candidate, is poised to oust the incumbent Congress party, a result that would be a "catalyst" for a long-term advance in the rupee toward 40 to 45 per dollar, from 61.19 on March 14, according to Adam Gilmour, Citigroup's head of Asia-Pacific currency and derivatives sales. A weak coalition would be the "worst-case" outcome, he said, and might send the currency sliding beyond August's record low of 68.83.
"The market view is that if Modi gets in, it will be a game-changer," Gilmour said in an interview. "We always take politics with a pinch of salt, with the rare exceptions like India, where it's going to really make a difference."
The rupee lost about 28% of its value from the end of 2010 through last year, making it the worst performer among 12 Asian currencies tracked by Bloomberg.
The declines reversed when India raised import tariffs on gold, helping narrow the shortfall in the broadest measure of trade to a four-year low, and RBI governor Raghuram Rajan increased interest rates to curb Asia's fastest inflation. The rupee has rebounded about 13% from its August 28, 2013 record, and remained little changed even during the rout in emerging-market assets earlier this year.
A jump in the rupee to as high as 40 per dollar would represent a 35% rally in India's currency from the end of last week, and send it to the strongest level since April 2008. Gilmour's prediction, for which he didn't give a timeframe, is 5 rupees higher than the most bullish forecaster in a Bloomberg survey of more than 30 strategists, whose median estimate foresees the currency at 63 on December 31 and at 58.50 by the end of 2016. Bloomberg
NEW DELHI: Boosted by capital inflows and euphoria around the incoming government, rupee's surge to 11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.
With a gain of about 5.3 per cent since the start of this year, rupee has sprinted ahead of its other Asia-Pacific peers, including Indonesia's rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various currencies vis-a-vis the Greenback.
The rupee, which closed at 58.52 levels against the US dollar on the last trading day on Friday, has incidentally seen a lion's share of 5.3 per cent gain in the past one month.
The Indian currency stood at Rs 61.8 level per US dollar at the start of 2014 and has recorded a gain of 327 paise in less than six months, partly helped by robust foreign fund inflows. This marks a major turnaround since August last year when rupee touched its lifetime low of 68.80.
"...positive sentiments out of the election results enabled us to upgrade our FII flows estimates by $5 billion to $20 billion, implying an overall BOP (balance of payment) surplus of $29 billion. We expect the dollar/rupee range to be 57-61 in FY2015," said Indranil Pan, chief economist of Kotak Mahindra Bank, in a report.
Under the leadership of its prime ministerial candidate Narendra Modi, BJP has recorded an unprecedented victory in the recently held Lok Sabha elections and the Gujarat strongman will be sworn in as Prime Minister on May 26.
The highest-ever tally in the Lok Sabha elections has helped BJP secure a majority on its own, thus raising hopes of big-bang reforms to revive the economy.
In Asia-Pacific, the rupee's gains versus the US dollar are followed by the Rupiah (Indonesia) that has appreciated 4.6 per cent, New Zealand dollar's 3.75 per cent rise and Australian currency's 3.5 per cent rise.
The Yen (Japan), the Won (South Korea) and the Ringgit (Malaysia) have gained between 2-3 per cent in this calendar year so far.
Philippines Peso has appreciated 1.6 per cent against the US dollar, followed by 0.5 per cent uptick in Thailand's Baht and Singaporean dollar. While the Hong Kong dollar is almost unchanged since 2014 started, the Taiwan dollar and Chinese Yuan have lost value.
Some analysts, however, feel that the Indian rupee faces risk of some depreciation after its recent strong show.
"While Indian rupee is expected to depreciate slightly against the $from current levels (we pencil dollar/rupee to hover around 60 for this fiscal year), we expect it to gain against Yen and Swiss Franc," said a report from ICICI Bank Treasury Research Group.
Banking on Modi, foreign investors to pour $60 billion into India: Study - The Times of India
NEW DELHI: Foreign investment inflows are estimated to more than double to $60 billion level this fiscal as overseas investors repose confidence in Narendra Modi-led government that is expected to unleash big-bang reforms to reboot the economy, says an Assocham study.
"Riding on huge expectations from the incoming Modi government, global investors are gung ho on the Indian economy which is expected to witness over 100 per cent increase in foreign investment inflows — both FDI and FIIs — to above $60 billion in the current financial year as against $29 billion during 2013-14," the study projected.
The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014-15, are expected to even overtake the figure of $46.17 billion during fiscal 2012-13, one of the best years for overseas investment inflows, it estimated.
"The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now," Assocham president Rana Kapoor said.
However, the emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee rate and inflation from the increased liquidity into the system.
The new finance minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance, Assocham said.
In the current fiscal, the FII investment would remain more than the FDI inflows, Assocham said. The expectations are that FII investment in both debt and equity could exceed $35 billion while the FDI money could be above $25 billion.
"If the Modi government is able to take some reforms-friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things will move on from there," Kapoor said.
Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, the study found.
Besides, as the new government goes about removing obstacles in investment, FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy, the study said.
Rupee may surge 35% to 40 per dollar if Modi becomes Prime Minister, Citigroup's Adam Gilmour says - The Times of India
Rupee may surge 35% to 40 per dollar if Modi becomes Prime Minister, Citigroup's Adam Gilmour says
A victory for the Bharatiya Janata Party in next month's general elections is seen powering the rupee to highs last reached in 2008.
Polls show the BJP, which has projected Narendra Modi as its prime ministerial candidate, is poised to oust the incumbent Congress party, a result that would be a "catalyst" for a long-term advance in the rupee toward 40 to 45 per dollar, from 61.19 on March 14, according to Adam Gilmour, Citigroup's head of Asia-Pacific currency and derivatives sales. A weak coalition would be the "worst-case" outcome, he said, and might send the currency sliding beyond August's record low of 68.83.
"The market view is that if Modi gets in, it will be a game-changer," Gilmour said in an interview. "We always take politics with a pinch of salt, with the rare exceptions like India, where it's going to really make a difference."
The rupee lost about 28% of its value from the end of 2010 through last year, making it the worst performer among 12 Asian currencies tracked by Bloomberg.
The declines reversed when India raised import tariffs on gold, helping narrow the shortfall in the broadest measure of trade to a four-year low, and RBI governor Raghuram Rajan increased interest rates to curb Asia's fastest inflation. The rupee has rebounded about 13% from its August 28, 2013 record, and remained little changed even during the rout in emerging-market assets earlier this year.
A jump in the rupee to as high as 40 per dollar would represent a 35% rally in India's currency from the end of last week, and send it to the strongest level since April 2008. Gilmour's prediction, for which he didn't give a timeframe, is 5 rupees higher than the most bullish forecaster in a Bloomberg survey of more than 30 strategists, whose median estimate foresees the currency at 63 on December 31 and at 58.50 by the end of 2016. Bloomberg
