The Indian rupee is going to grow in the coming months as the central bank will probably rise the interest rate and will allow currencys appreciation according to Bank of America strategist.
This is not very popular scenario among the currency market analysts, but Bank of America and some other investment institutions think that the rupee will rise more than 9% by the years end and the Indias repurchase rate will be lifted from 7.75 percent to 8 percent on the next Reserve Bank of India meeting.
The growing inflation rate in India forces nations financial authorities to sacrifice exporters competitiveness. 7.57 percent inflation in India is one of the main driver for the rupees probable appreciation.
Yeo Han Sia, a strategist at Bank of America, spoke in an interview about the current situation with Indias inflation:
Currency appreciation is a monetary policy tool India will definitely have to explore in coming months If you have a persistent overshoot of inflation, resulting in an erosion of market confidence over the central bank and the governments credibility to fight inflation, then the issue that develops is much more serious.
USD/INR rate decreased today on Forex from the Fridays close 40.725 to 40.599 as of 9:31 GMT.
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