We expect rupee to be the best-performing Asian currency in 2024'
global investors, India holds the most attractive investment proposition among emerging market economies, Candace Browning, head of Global Research, Bank of America, tells Bhaskar Dutta. Edited excerpts:
How do you view India as an investment destination versus other emerging markets? We have seen outflows of foreign investment from stocks for the last two months.
India has the best investment case in emerging markets, in our view. It is the second biggest contributor to global growth after China, and thanks to its very favourable demographics it eventually may become number one. India's workforce peaks only mid-century, while it has already peaked in China and in developed markets. India is also a key beneficiary of «friend-shoring» and the unfolding AI boom. For this year we expect India to deliver 5.8% GDP growth vs 5% in China and 4% in emerging markets overall.
What is your view on the rupee this year? Does Japan's nascent steps towards policy normalisation pose a risk for emerging market currencies?
We expect the rupee to be the best-performing Asian currency in 2024, as it has already been so far this year. We expect it to appreciate to USD/INR 83.0 by end-Q4. This may sound small, but it is remarkable given the strong US dollar and the continued weakness we expect in other Asian currencies. We are also more bullish on the rupee than the consensus. The rupee benefits from robust investment inflows, an attractive yield differential and low volatility thanks to the skilful management by the central bank.
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