Indian rupee seen strengthening to 57.50 against US dollar

Mumbai | Updated: May 20 2014, 03:33am hrs
Indian rupeeExpectations are sky high and rightly so, the incoming Prime Minister Narendra Modi has a well proven track record in the state of Gujarat. (Reuters)
After a strong political mandate achieved in the recently concluded Lok Sabha election, it is not all surprising to find that the Indian rupee has gained significantly against all major currencies, including the US dollar. Rupee has appreciated anywhere between 2% to 4% against the majors. FIIs have continued to pour millions of US dollars into the domestic equity market and at the same time, speculators have gladly added to their existing short bet on the Greenback.

Expectations are sky high and rightly so, the incoming Prime Minister Narendra Modi has a well proven track record in the state of Gujarat. We expect the government to soon get into action mode on policy and the next Budget by first/second week of July will be crucial. At least, till the Union Budget, we can expect rupee to remain supported at lower levels and show inclination to move towards 57.50/58.00 levels on spot. In case of RBI intervention and global market volatility, the local unit can find strong support between 59.00/59.50 levels. Rupee will also find favour against the Euro and Yen.

By Anindya Banerjee, analyst, Kotak Securities