UBS expects the Indian currency to weaken to 77 to a dollar by the end of the year
Swiss investment bank UBS expects weakness in the rupee despite it being one of the most stable currencies in Asia-Pacific this year.
According to a note dated August 25, UBS expects the Indian currency to weaken to 77 to a dollar by the end of 2021. This amounts to an over 5 percent decline from current levels. The investment bank expects the rupee to depreciate further to 79.5 by September 2022.
“We see the year-to-date INR stability as short-lived,” UBS said, adding that a retreat in US bond yields lent stability to currencies like the rupee.
The Indian rupee declined 4 paise to 73.06 against the US dollar in opening trade on September 6, tracking a firm American currency.
At the interbank foreign exchange, the rupee opened at 73.02 against the dollar, then fell to 73.06, registering a fall of 4 paise over its previous close.
On September 3, the rupee had settled at 73.02 against the US dollar.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading up 0.18 percent at 92.20.
British investment bank HSBC, however, has a positive view of the Indian currency. It expects the rupee to reach 73 against the dollar by year-end and says the currency will likely end flat with its end-2020 level.
In the longer term, the bank expects modest weakness where the rupee can fall to 75 against the dollar.