Indian rupee might recover to 52 per USD; conditions apply

Indian government announced measures to boost investment, including approving foreign direct investment (FDI) in broadcast, multi-brand retail and aviation, together with partial privatization of four state-run industries. 

These measures drove the rupee to 53.66 against the dollar on Monday – its highest level in four months. The currency has since pulled back slightly trading around 54.

Experts anticipate rupee might touch 52 per USD next month provided government stand firm on its decision.

Paul Mackel, Head of Asian Currency Research at HSBC, is also optimistic on the rupee’s outlook, forecasting the currency to touch 52 against the dollar in the near-term, before appreciating further to 49 in 2013.

“The rupee deserves to be on a better footing versus the U.S. dollar on the back of these measures, although there still are implementation risks,” he said. 

The Indian government has a history of flip-flopping on policies in the face of political pressure. In December 2011, for example, the government unveiled plans for FDI in multi-band retailing, only to back away from it days later.

Source: CNBC