Crisil sees Re stabilising at 45-46
14 November 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.
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