The rupee is set to underperform against the dollar again this year, weighed down by uncertainty ahead of a national election in May, but is unlikely to retest life-time lows, a Reuters poll showed.
After reversing some of the deep losses in the final few months of 2018, the rupee has lost about 3 per cent so far this year, including nearly 1 per cent since the government delivered a populist interim budget on Friday and inflamed concerns about the nation’s fiscal deficit.
The latest poll of over 55 foreign exchange strategists taken January 28-February 5 showed the currency will strengthen only slightly to 71.0 per dollar in a year from around 71.8, where it was trading on Tuesday.
While that outlook for the rupee, the worst-performing major Asian currency this year, was slightly better compared to the previous poll, it is largely driven by expectations the dollar’s dominance has diminished.
“From stellar outperformer in October-December 2018 — falling below 70 from about 74 — the rupee has turned to become the sole whipping boy this year.. and is set to remain on the back foot,” said Vishnu Varathan, head of economics and strategy for Asia at Mizuho Bank.
