Westpac Banking Corp had predicted a 6% hike in the value of the rupee against the dollar in 2015, the report said. Instead, the rupee's value dropped 4.7% in 2015, and has already shed 3.15 since the beginning of 2016.
The rupee is expected to fall to near 2013 levels by the end of the year, Sean Callow, a foreign-exchange strategist at Westpac Banking Corp has been quoted in a Bloomberg Business report as saying.
Citing reasons for the rupee's fall, he said, that the Indian currency may touch 69.5 to a dollar by the end of 2016, a level not seen since 2013.
In 2014, Westpac Banking Corp had predicted a 6% hike in the value of the rupee against the dollar in 2015, the report said. Instead, the rupee's value dropped 4.7% in 2015, and has already shed 3.15 since the beginning of 2016.
The rupee was expected to rally on the back of oil prices falling to historic lows on the back of the crucial US-Iran deal and fears of a supply glut which is expected to keep oil prices down in the foreseeable future. The tumbling oil prices have resulted in bringing the current account deficit in India down from the high-levels seen in 2013. However, the rout in the global markets kickstarted by China's devaluation of the yuan last year, and the subsequent domino effect on global markets, including India, has taken a toll on the rupee.
Callow says in the report that if the drop in oil prices and fall in current account deficit had occurred against a more settled global environment, the rupee could have out-performed its peers.
Thus far, the rupee has lost most ground among various Asian currencies. Even India's growth prospects and its GDP growth surpassing that of China's have failed to bottom out the fall in the rupee's value. From here, the rupee is still expected to fall further, Callow says.
In the wake of a sell-off in the global markets, foreign investors are pulling out of Indian markets consistently. Foreign investors usually pull out from emerging markets at the time of a global slowdown, in a bid to invest in more stable markets. In these periods of pronounced risk aversion, investors will sell both, winners (stocks) as well as losers (stocks), Callow has been quoted as saying.
In January global funds pulled a net $1.7 billion (Rs 11,624.6 crore) from the Indian stock markets. This is the biggest outflow in the last five months. FII outflows have resulted in wiping about $7.9 trillion from global equities this year.
The sell-off in emerging markets is also coinciding with fading confidence in Prime Minister Narendra Modi's ability to push for economic changes including the goods and service tax (GST) bill deadlock, said the report. All eyes are on the upcoming budget session now.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Representational Image")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}