The Indian rupee's path against the US dollar is one of long-term appreciation as India builds increasingly strong services and goods export buffers to offset the country's traditional current account deficit, said Patrick Law, head of Asia-Pacific fixed income, currencies, and commodities trading, at Bank of America. While a weaker Chinese yuan and the risk of US rates staying higher for longer pose risks for emerging market currencies, the rupee is «a very special case» because of India's bullish outlook, Law tells Bhaskar Dutta. Edited excerpts:
Amid sharp swings in the US dollar and Asian currencies, the rupee continues to be stable. Have the fundamental drivers changed for the Indian currency?
I am very bullish on India. It's not just about global bond index inclusion. It's about the long-term prospects of the country and the economy, foreign inflows, and investment. India is definitely benefiting from the China-plus-one narrative.
Two, the expansion of the service industry is continuing. There's a lot of talk about global capability centres, which is going to keep increasing. You think about this — India traditionally suffers from a current account deficit especially when oil prices rise. Now, over time, you will have the buffer of the services and also
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