BackRupee falls on deficit concerns
The partially convertible currency closes at 53.22/23 per dollar
PremiumMumbai: The Indian rupee fell on Thursday after a government projection estimated economic growth in the fiscal year will be worse than expected, raising concerns about how it would fund its fiscal and current account deficits.
The government said the country’s slowest growth in a decade could be much worse than earlier projections. Preliminary data released on Thursday showed the economy set to have grown 5% in the fiscal year ending next month, underscoring the urgent need for reforms to boost growth.
The concerns about slowing growth come even as a continued risk appetite has ensured large capital inflows into the equities markets, most recently into state-run power utility NTPC Ltd’s share sale.
The $2.1 billion share auction in state-run power utility NTPC was fully covered on Thursday, provisional data from the BSE showed.
“The disinvestment process, deregulation of diesel prices and also some budgetary stance may help lower CAD (current account deficit) as well as fiscal deficit. Therefore, we need to consider the bigger perspective," said Ashis Barua, a senior forex dealer at IndusInd Bank Ltd.
“In the near term, I feel one touch to 52.35-52.40 is due," he said.
The rupee will strengthen around 1% to 52.50 in 12 months, a Reuters poll showed.
The one-year forward premium eased to 351.50 points versus 355 points on Wednesday.
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