BackRupee slump trips fewer alarms as funds say India less fragile
While rupee slipped to within 1.8% of the unprecedented 68.8450 a dollar reached in August 2013, strategists predict it will strengthen to 67 by March
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Mumbai: Global investors are keeping faith in India’s rupee bonds, even as the currency inches toward the record low reached in 2013, saying the nation’s finances have improved over the past two-and-a-half years.
Western Asset Management Co., which manages about $450 billion, says it has “very large overweight exposure" to India’s currency and debt. Amundi Asset Management said the market will remain stable despite global volatility. While the rupee has slipped to within 1.8% of the unprecedented 68.8450 a dollar reached in August 2013, strategists surveyed by Bloomberg predict it will strengthen to 67 by March-end.
Asia’s third-largest economy has been overhauled since the rout in 2013, when a record current-account deficit, soaring inflation and weak growth led Morgan Stanley to include the rupee in its list of “fragile five" currencies. Central bank governor Raghuram Rajan boosted India’s foreign reserves by the most among major developing economies, a slump in oil prices improved external finances and inflation halved. The World Bank predicts India’s growth this year will be the fastest among the world’s major economies.
“The rupee is a completely different story today and has lost its fragile status," said Viraj Patel, a London-based strategist at ING Groep NV, among the most accurate forecasters of the rupee in Bloomberg’s rankings. “The Indian economy is in a much better shape to withstand financial market turmoil. The favourable growth dynamic means that the rupee is not being viewed as a go-to short."
India is the only country among the so-called fragile five with a positive outlook from Moody’s Investors Service. The ratings company has put Brazil on review for a downgrade to junk, while it has a negative outlook for South Africa and Turkey and a stable outlook on Indonesia. Bloomberg
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