Macquarie joins the 'short USD/INR' trading calls

An employee arranges currency notes at a cash counter inside a bank in Agartala February 18, 2010.

Reuters Market Eye - The "short USD/INR" recommendations are piling up, with Macquarie the latest foreign bank to issue the call.

The impact of expected rate cuts on economic growth and continued government policy reforms are turning analysts more optimistic about the rupee.

"We acknowledge India's lingering longer term risks from the twin fiscal and current account deficit," Macquarie writes on Tuesday.

"But for the short term, we are of the view that the rupee could benefit from the reform measures and a strong demand for EM equities, even as direct investment inflows begin to rebound," it adds.

Macquarie says the current bounce in USD/INR is an opportunity to go tactically short via 3-month NDF as policy reforms start to pay off via capital inflows.

The bank sets its target at 52.18, with a stop loss at the spot reference of 55.46 spot.

Westpac, Credit Agricole have recently issued short USD/INR calls.

(Reporting by Subhadip Sircar)