Auto India

Incoming Reserve Bank of India Governor Raghuram Rajan will prioritise currency stability over inflation and growth, according to a Reuters poll which also showed the worst is not over for the rupee.

The rupee has lost around 15 per cent to the dollar, hitting record lows almost daily, since the U.S. Federal Reserve hinted in May that it would soon begin paring back its massive economic stimulus programme, sparking an investor exodus from emerging markets seen as the most exposed to foreign funding.

Rajan, a widely acclaimed economist, takes over as governor of the RBI from incumbent Duvvuri Subbarao on Sept. 5, at a time when the Indian economy is facing its worst crisis since 1990-1991.

Eleven of 17 economists polled by Reuters said the currency will be the top priority for Rajan but the consensus showed it will likely weaken to 69 per dollar before rising, implying a further 7 per cent fall from Monday's spot rate of 64.10.

Most expected it to bottom out in September.

Indian rupee could plunge to 70 to US dollar soon, says Deutsche Bank

The Indian economy is caught in a quagmire of slow growth, high inflation, rickety government finances and a tumbling currency that is the among the worst performing in emerging markets.

"Rajan could streamline the RBI's focus to stabilising the currency and inflation while being supportive of growth," said Nizam Idris, head of FX strategy at Macquarie Bank in Singapore.

"The RBI must realise it cannot control the rupee, rates, capital flows and inflation all at the same time."

Most of the RBI's moves to break the currency's fall so far have not helped.

Since mid-July, it has tightened cash conditions which have failed to support the rupee, partly as Subbarao later said those measures were temporary.

... contd.

ALSO READ

HUDCO plans to raise up to 12.50 bn rupees via tax free bonds

Indian rupee falls sharply by 100 paise to 64.20 against dollar

Banks call for $20 billion war chest to defend rupee

Govt has not drawn any red line on Indian rupee value, says Montek Singh Ahluwalia

TERMS OF USE: The views, opinions and comments posted are your, and are not endorsed by this website. You shall be solely responsible for the comment posted here. The website reserves the right to delete, reject, or otherwise remove any views, opinions and comments posted or part thereof. You shall ensure that the comment is not inflammatory, abusive, derogatory, defamatory &/or obscene, or contain pornographic matter and/or does not constitute hate mail, or violate privacy of any person (s) or breach confidentiality or otherwise is illegal, immoral or contrary to public policy. Nor should it contain anything infringing copyright &/or intellectual property rights of any person(s).