Barclays expects rupee at 61 in 6-12 months
Reuters Market Eye - Barclays expects the rupee at 61 in six to 12 months, which partly reflects an improvement in the current account deficit.
India's current account deficit has the potential to surprise favourably, Barclays says. Cuts 2014 financial year deficit forecast to $68 billion from $80 billion, versus the average of $83 billion in the past two fiscal years.
India should be able to almost fully fund its current account deficit in the 2014 financial year unless capital inflows surprise further on downside, the note states.
"The INR weakness and government efforts to curb various imports, on top of sluggish domestic demand reflecting weak economic activity, are also important factors reducing the trade and current account deficits," Barclays says in the note.
Barclays' INR forecast is less bearish than many recent forecasts. Deutsche predicted USD/INR to go to 70 in a month or so, while Credit Agricole said it does not see fundamental value below 70.
(Reporting by Subhadip Sircar)
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