UBS revises India rupee forecast to 40.5 by end-2008
MUMBAI, May 7 (Reuters) - UBS (UBSN.VX: Quote, Profile, Research) on Wednesday revised its forecast for the rupee INR=IN to 40.5 against the U.S. dollar by the end of 2008 from 37.
"With the rupee already at 41 our calendar year forecast of 37 is looking forlorn given that many fundamentals (inflation & trade) will continue to point in the other direction for some months yet," UBS economist Philip Wyatt said in a research note.
The rupee has weakened on high commodity prices, a downswing in the economy and a modestly stronger dollar, UBS said.
"In our view these factors are sufficiently strong to promote further weakness at least for the next quarter, until the U.S. enters recession and local inflation peaks out," the note said.
"Thereafter, the rupee should be able to recover," he said.
The rupee weakened past 41 per dollar on Wednesday for the first time since August and has fallen 4.3 percent so far in 2008.
UBS also changed the forecast for rupee for the end of 2009 to 38 from 35.6 earlier. (Reporting by V. Ramakrishnan; Editing by Ramya Venugopal)
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