Good news for importers! 'Worst over, rupee to be at 67-68/dollar by December'

The dollar rally is likely to fade out as the US mid-term elections come into play in November and also as the twin deficit problem in the US resurfaces and market starts focusing on that, she said.

Rupee ended below the 70-mark against the US dollar for the first time ever on August 16, Image source: Reuters

The rupee has suffered significant losses this year but the worst seems to be over and the domestic currency is expected to be in the range of 67-68 against the US dollar by December, according to an economist with HDFC Bank.

The rupee ended below the 70-mark against the US dollar for the first time ever on August 16 and has lost 10 per cent so far this year amid global uncertainties and concerns over inflation.

"Barring few episodes that could still come in due to extreme volatility in the markets, definitely the worst for the INR seems to be over. We think that by September end the fair value of the rupee would be around 68-69 and that is where it should go and settle," Sakshi Gupta, India Economist, HDFC Bank told PTI.

Beyond September, the US dollar rally is likely to fade out and that would be rupee positive.

The dollar rally is likely to fade out as the US mid-term elections come into play in November and also as the twin deficit problem in the US resurfaces and market starts focusing on that, she said.

She further noted that some bouts of volatility are likely as seen in recent times with respect to Turkey or other emerging markets and escalation of risks related to the trade war between US and

China, but even during those periods the Reserve Bank is definitely going to try and stabilise the currency.

"By this fiscal year-end the fair value of rupee is expected to be around 67-68. But going into next year with election risks coming in domestically...Usually we see a lot of volatility in the currency markets just before the elections.

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