Prediction 2015: Indian Rupee To Slump To A 10-Month Low in January

The Indian Rupee had quite a volatile 2014, but unfortunately there is no good news in sight. As per ZyFin Research, the Indian Rupee will touch a 10-month low level of Rs 62.4 by January 2015 against the USD.

In a press statement, Debopam Chaudhuri, Chief Economist, ZyFin Research, quoted, “2014 remains a volatile year for the rupee exchange rate, despite some significant recovery in India’s current account deficit. With an expected rise in US interest rate regime, there is a high probability of a significant decline in demand for rupee from FIIs in the short run, leading to further depreciation. In this context, the RBI’s decision to not cut rates may help reduce the volatility in exchange rate until India regains its position as a lucrative investment destination.”

As of now, the Indian exports are under stress, which is leading to a run on its USD reserves. Though the uncertainty regarding the economic recovery is really helping India’s investment rating, it is, at the same time, is also leading to USD outflow. Experts feel that this improving US economy will further increase the possibility of rupee declining further against the USD among foreign institutional investors (FIIs)

It is noteworthy, that the Indian Rupee had hit an all-time low of 68.845 per dollar in August 2013. However, it managed to recover some ground in 2014. The ZyFin Research is pegging that the situation might improve towards the second half of 2015. It further goes on to peg that it might touch 58 against the dollar by October 2015.