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Credit Agricole expects rupee at 52 by end-2013
December 13, 2012 / 5:07 AM / in 5 years

Credit Agricole expects rupee at 52 by end-2013

Reuters Markey Eye - Credit Agricole expects the rupee to strengthen to 52/dollar by the end of 2013, with the currency trading at relatively attractive valuations in REER terms and having priced in “many of the fundamental problems it faces.”

A shopkeeper counts Indian currency notes inside his shop in Jammu July 14, 2010. REUTERS/Mukesh Gupta/Files

Key imbalances in India’s economy, including the current account deficit, will gradually diminish next year, says the brokerage.

However, risk-adjusted returns will be “less impressive” given the relatively high volatility in the USD/INR, it adds.

INR will also not benefit much from improvements in risk appetite given a “very low” correlation with risk appetite, Credit Agricole says.

USD/INR has been more sensitive to gyrations in the dollar, and Credit Agricole expects a gradual appreciation in the USD index over 2013 to constrain any strong rally in INR.

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