Rupee expected to remain under pressure; Studying abroad may become costlier
Mumbai: Individuals travelling abroad and the Indian importers will have to bear some more pain as the Indian rupee is expected to remain under pressure against the dollar in the coming days. Experts tracking the forex market said that the dollar is likely to rally against a basket of currencies on expectation that the US Federal Reserve would start increasing interest rate as early as June this year.
“Reports of heavy dollar buying in the offshore market and fear of exit of FPI from the Indian equity markets continue to weigh on the rupee,” said Suresh Nair, director, Admisi Forex. According to him, the rupee is enjoying good support at 62.80 levels. “A break above those levels could push the rupee-dollar pair to 63.20 levels,” he added. Abhishek Goenka, founder of India Forex advisors expects the rupee to move in a broad range of 62-64 to the dollar in the coming days. According to him, the inflow and outflow of funds from the Indian debt market will have to be closely watched as the spread between 10-year Indian bond yields and US treasury yields are coming down.
“India’s 10-year bond yield has corrected nearly 80 basis points since the start of October 2014 on expectation of interest rate cut by RBI. On the other hand the US 10-year bond yield has corrected just 20 basis points during the period. Consequently, the yield spread has reduced 70 basis points to 5.56 per cent. This spread will further narrow on more easing by RBI and this could lead to lower fund flows into the Indian debt market,” said Mr Goenka. However, he said that there is no panic buying of dollar by importers so far.
However, the weakening rupee has so far failed to make any impact on individuals travel plans. “It is too early to see any impact on individuals travel plans,” said Samyukth Sridharan, chief operating officer, Cleartrip.com. In the worst-case scenario Mr Sridharan said that individuals might downsize their travel budget. “But there wont be any cancellation of travel plans,” he said and added that the flight ticket fares which form a major component of an individuals travel budget has remained flat and stable due to lower fuel prices.
