No sharp decline seen in Rupee: PHD Chamber

No sharp decline seen in Rupee: PHD Chamber

No sharp decline seen in Rupee: PHD Chamber

 

No.PR-39
June 5, 2015
New Delhi
 

No sharp decline seen in Rupee: PHD Chamber
 

Amidst global economic developments, there will not be any sharp decline in rupee from the current level, said PHD Chamber of Commerce and Industry.
 

While there will not be any significant upward movement from the current level, it will also not decelerate like August 2013.
 

During the last one year, the rupee depreciated from around 59/USD in May 2014 (average) to about 64/USD (average) in May 2015.
 

Volatility in international economic system vis-a-vis changing monetary policy stance among the advanced economies may have increased impact on rupee volatility. But any sharp upward or downward movement in exchange rate scenario is ruled out, said the industry body.
 

Though, challenges in the global economic environment are emerging once again, India’s economic resilience has strengthened during the recent times.
 

Our policy environment needed to be more speedy on various policy decisions which addresses the ease of doing business and attractiveness of the economy for foreign investments, said  the PHD Chamber.
 

India attracted FDI equity inflows at about USD 31 billion and FII investments at around USD 45 billion in 2014-15.
 

The Current Account Deficit (CAD) at 1.6% of GDP in Q3 2014-15 as against 0.9% of GDP in Q3 2013-14 is more or less manageable at this juncture.
 

Forex reserves at about USD 352 billion in May 2015 as against USD 312 billion in May 2014 have been improved significantly.
 

Trade balance at around (-) USD 137 billion in 2014-15 as against about (-) USD 136 billion in 2013-14 has remained more or less same.
 

The crude oil prices are expected to remain sluggish and should average at around US$60 in the medium term, so there may not be any serious impact on trade deficit in the medium term.
 

However, export infrastructure in general and transportation costs in particular needed to be looked seriously to revive the sluggish export growth trajectory.
 

WPI inflation is hovering in negative trajectory at around (-) 2.7% in April 2015 and CPI inflation is in the comfortable zone at around 5% in April 2015.
 

Notwithstanding the decline in inflation numbers, the impact of weak monsoon, as forecasted by IMD, should be mitigated by strengthening the public distribution system and MGNREGA.
 

Percentage change in exchange rate of rupee against USD over May 2014   (%)

 

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Source: PHD Research Bureau compiled from RBI

 

ENDS

Koteshwar Prasad Dobhal
Consultant (PR)