Crisil sees Re stabilising at 45-46
By Our Banking Bureau | 14 Nov 2003
Chennai:
The Credit Rating Information Services of India (Crisil)
expects the rupee to stabilise between Rs 45 and Rs
46 to a dollar, according to Crisil chief economist
Dr Subir V Gokarn.
Gokarn
notes that this is a radical estimate, because several
other experts have said that the rupee will strengthen
further against the dollar and probably reach Rs 42
to a dollar in one year's time.
Crisil, however, believes that a number of factors could arrest the appreciation of the rupee. For example, the US economy is looking up and a part of the foreign investments could go to that country. Second, there is a current account deficit emerging and this could produce a demand for dollars.
Crisil
also expects the yields on the benchmark 10-year government
securities to go up, maybe by about 30 basis points
(bps). "We see an increase of 20-30 bps at the
10-year end and this is likely to increase the yield
spread by 15-20 bps. But there is still abundant liquidity
in the system and this is likely to cap any large increases
in yields."