The rupee may gain from increased capital inflows
Picture for representational purpose only.
Mumbai: UK-based Standard Chartered Bank on Tuesday said that the forex markets have only partially priced in the likelihood of a BJP-led National Democratic Alliance (NDA) coming to power at the Centre as uncertainty about the accuracy of opinion poll persists.
According to it, if the NDA manages to win more than 240 seats, the rupee may gain further from increased capital inflows as it would lead to the expectation of a growth recovery by focusing on infrastructure and manufacturing.
On Tuesday, the rupee tumbled for the third consecutive day against the dollar and closed the day at 60.67 to the dollar, its lowest level in the last four weeks.
In 2014 till date, the rupee has gained only 2.5 per cent against the dollar while comparable emerging market currencies like the Indonesian rupiah and the Brazilian real have appreciated 5-7 per cent.
In case NDA wins between 220-240 seats, analysts said that the sentiments in the asset markets could remain depressed as uncertainty would prevail.
According to them, such a government would not have the cohesion to push through difficult reforms. “We expect a knee-jerk mild sell-off in the rupee as markets brace for an uncertain period.”
( Source : dc correspondent )
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