* For poll data click on
* Little change in yuan forecasts despite recent slide
* C.bank likely engineered drop to punish speculators
* Yuan expected to appreciate slightly on capital inflows
* Indian rupee expected to weaken on political uncertainty
By Rahul Karunakar and Shaloo Shrivastava
March 7 (Reuters) - The Chinese yuan is still expected to appreciate modestly this year, buoyed by continued foreign capital inflows, despite the central bank’s recent moves to weaken the currency to punish speculators, a Reuters poll showed.
The poll of foreign exchange strategists conducted in the past week showed the yuan is expected to trade at 6.07 to the dollar in three months, 6.03 in six and 5.98 in a year, a rise of 2.3 percent from Thursday’s close of around 6.12.
Those forecasts are little changed from a February poll, despite the People’s Bank of China (PBOC) letting the yuan fall 0.9 percent last week, its biggest-ever weekly decline, and capping off its largest monthly loss, 1.4 percent, in February.
But it fixed the official midpoint of the band higher on Thursday, a sign the central bank is willing to let the currency stabilise.
“The central bank’s plan (is) to open up gradually to capital accounts and in this process we think that there will be a tendency for the yuan to appreciate,” said David Kohl, head of currency research at Julius Baer.
This comes despite overall agreement among analysts in Reuters polls that the dollar will be ascendant this year as the world’s largest economy accelerates and as the U.S. Federal Reserve winds down it bond purchasing programme.
China’s government is trying to rebalance its economy toward stronger consumer spending rather than an over-reliance on exporting cheap goods to the rest of the world.
In a State of the Union style address to an annual parliament meeting that began on Wednesday, Premier Li Keqiang said China aimed to expand its economy by 7.5 percent this year, the target as last year.
Forecasters in the latest Reuters poll predict growth of 7.4 percent this year.
The world’s second-largest economy is still attracting heavy capital inflows into both the current account and capital accounts, which means the yuan has potential to appreciate gradually, analysts said.
However, it is a different story for India, which is struggling to attract foreign investment ahead of national elections due in April.
The opposition Bharatiya Janata Party is likely to win the largest block in parliament, but it is uncertain how much support it will need from smaller regional parties to form a coalition. That might spook investors as regional parties usually hold policy hostage to local agendas.
The Indian rupee is therefore expected to fall, trading near Thursday’s close of 62.00 per dollar in one month, and gradually weaken to 63.25 in six months and 63.60 in a year, which would mark a depreciation of just over 4 percent from current levels.
“The biggest factor affecting (the rupee) will be the election outcome. In case of a clear decisive mandate, we expect the currency to witness sharp gains,” said Upasna Bhardwaj, an economist at ING Vysya Bank.
Still, those forecasts, little changed from last month, suggest it will not be the worst performer among its peers, according to a separate Reuters poll earlier this week, which showed Turkey’s lira and South Africa’s rand will be caught in the crosshairs of emerging market capital outflows. (Reporting and polling by Shaloo Shrivastava; Editing by Kim Coghill)