Rupee fairly valued, may reach new lows, aligning with other peer group currencies: Mahendra Kumar Jajoo
Mahendra Kumar Jajoo, Head-Fixed Income, Mirae Asset Investment, says the rupee is currently valued at 87-87.5 which he considers fair value and may reach new lows, aligning with other currencies. Downward pressure is due to selling by foreign institutional investors (FIIs). However, as March approaches, we expect the Reserve Bank to implement measures in its monetary policy to help banks attract more foreign currency deposits, including the FCNR(B) scheme and eased criteria for external commercial borrowing (ECB).
Where do you see the rupee headed because it has been weakening further. It touched an all-time low on Wednesday.
Mahendra Kumar Jajoo: After the depreciation in the last one month, rupee is now largely in line with the peers in the rest of the global markets. Currencies like Brazilian Real or Mexican Peso have been depreciating by about 15% to 20% in the last one year. Rupee on a year-to-year basis is just down about 5%. So, there was a period in October, November when the rupee was outperforming all the other major currencies and I think that correction has now been done.
At this point, the rupee is fairly valued at about 87, 87.5. So, for every movement, we will look at the rupee at a new all-time low, but it is just catching up with the peer group currencies. And now at this point, we have a little momentum against the rupee because there is continuous selling by the FIIs. But now as we get closer to March, we are also expecting some measures by the Reserve Bank in the monetary policy to allow
