Indian rupee may recover to 94 against dollar soon
What's the story
R. Govindan, Senior VP of Finance and Chief Risk Officer at Larsen & Toubro (L&T), has predicted that the Indian rupee will recover toward ₹94 against the US dollar in the near term. He believes that recent measures taken by the Reserve Bank of India (RBI) can help curb speculative short selling and provide stability to the currency market.
Market impact
Hedging costs may rise for companies
Govindan thinks the RBI's actions could help correct one-sided bets against the rupee and reduce speculative activity in the currency market.
He expects the rupee to stabilize in a range of ₹93-₹94.50 over the longer term.
However, he cautions that higher hedging costs could prompt companies to cut back on their currency hedging, especially for longer periods, due to increased costs of locking dollar positions.
Expert opinion
SBI sees positive signs for rupee
Soumya Kanti Ghosh, Group Chief Economic Advisor at the State Bank of India (SBI), also shares a positive outlook on the rupee.
He would be pleased if it strengthens to ₹94.50 against the US dollar.
Ghosh believes that RBI's measures should provide some relief amid global uncertainty, but sustained stability will depend on crude oil prices and capital flows.
Investment focus
Need for foreign investment to boost rupee
Ghosh also stressed the importance of attracting foreign investment, possibly through tax-related measures.
He said, "I would be very happy if the rupee could return to the level of ₹94.50 that it reached after the FCNR(B) measures."
Both experts agree that while RBI's actions could support the rupee in the near term, broader macroeconomic pressures must be addressed for a more durable recovery.