Rupee to depreciate in next 12 months against strong US dollar

After being stable for nearly a year, the Indian rupee is expected to depreciate marginally against the dollar in the next one year.

A Reuters poll revealed that the long-term view on the domestic currency was near a two-month high. At present, the rupee has been trading at around current levels of 62.15 for most of 2015, before weakening slightly to 63.50 a dollar in 12 months.

However, the poll forecasted that the Indian economy could get a boost from the economic reforms that may attract foreign investments as well as lower the current account deficit. This is furthermore expected as the government has focused on developing the infrastructure sector and restricting its borrowings in the recently tabled Budget 2015.

Besides, the Reserve Bank of India has also eased its policy rates. The RBI slashed repo rates twice this year as inflation subsided. The consumer prices rose 5.11% in January, which is a steep decline from the double-digit inflation just over a year back.

“The RBI may be more tolerant of currency appreciation going forward because of some probable upside trajectory in consumer prices,” said Idris.