Rupee to stabilise shortly: PHD Chamber

Rupee to stabilise shortly: PHD Chamber

Rupee to stabilise shortly: PHD Chamber

 

No.PR-084
August 28, 2015
New Delhi

 

Rupee to stabilise shortly: PHD Chamber
 

While expressing apprehensions regarding the volatility in the global markets, PHD Chamber of Commerce and Industry said in a press statement issued here today that the volatility in rupee will be short-lived and we expect stability in rupee in the near future.
 

The investment environment in India is increasingly improving vis-a-vis Government’s focus on ease of doing business. India is going to become a major investment hub in the coming times as international investors moving here and there in search of potential growth partners will find India a long term growth story, said the industry body
 

There is no need to worry as India’s economic resilience has strengthened during the recent times on account of factors such as improving FDI inflows and forex reserves, reducing current account deficit and declining trade balance due to fall in commodity prices, favourable inflationary scenario and several measures undertaken to boost up investment sentiments in the economy.
 

In the last quarter, India’s foreign exchange position has improved considerably. India attracted FDI equity inflows at about USD 9.5 billion during Apr-June 2015-16 as against USD 7.2 billion during the corresponding period of last year. The Current Account Deficit (CAD) also narrowed to 0.2% of GDP in Q4 2014-15 as against 1.6% of GDP in Q3 2014-15.
 

Further, the forex reserves have been improved significantly at about USD 353 billion in July 2015 as against around USD 320 billion in July 2014.
 

Depressed crude oil prices in the past are expected to remain sluggish in the medium term, thus firming the PHD Chamber’s belief that depreciating rupee will stabilise in the near future.
 

Going forward, the negative WPI inflation numbers which currently was registered at (-) 4% in July 2015 are expected to improve export competitiveness to further add to the expectation that rupee will enter into comfortable trajectory in the coming times.
 

However, there are certain concerns that need to be addressed to keep the value of rupee under control. The exports growth has been negative in the past few months and was registered at (-) 10.3% in the month of July, 2015. Thus, efforts are required on the part of the government in supporting export infrastructure in general and reducing transportation costs in particular to revive the sluggish export growth trajectory in the coming times.
 

Nonetheless, the threat of week monsoon looms large on the inflation scenario and export competitiveness of the economy.
 

It is expected that the reforms and policy initiatives by the new government in the coming times and improving GDP numbers will revive the investor’s sentiments to turn around the declining foreign inflows into the economy.
 

Going ahead, our policy environment needed to be speedy on various policy decisions to address the ease of doing business concerns and enhance attractiveness of the economy for foreign investments to stabilise the depreciating rupee in a comfortable trajectory in the coming times.
 

ENDS

Koteshwar Prasad Dobhal
Consultant (PR)