The basis of Ind-Ra's expectation of INR appreciation is based on economic developments in the last one to two months of this fiscal and the likely developments in the remaining months.
"Notwithstanding the likelihood of US Fed reversing the QE (quantitative easing) programme, Ind-Ra expects rupee to appreciate in the range of 8-11 per cent from its August-end 2013 level," Ind-Ra, a Fitch group company said in the report.
This would imply that rupee is likely to appreciate to 59-61 against the USD by end-March 2014, it added.
According to the report, the currency movements over January-May 2013 were more driven by fundamentals, while those over May-July 2013 were due to the outflow of portfolio investment triggered by the tapering off of US Fed bond purchase programme.
The report further said the sharp depreciation in the Indian currency was largely due to speculation, ballooning current account deficit, weakness in domestic economy and strengthening of the US dollar.
Meanwhile, the appreciation in the domestic currency would be largely driven by the recent policy measures taken by the RBI, resumption of capital inflows, passage of economic reform bills, lower current account deficit (CAD) in FY14 and pick-up of economic growth momentum from the third quarter of this fiscal.
"The expectation is based on recent policy measures taken by the RBI, resumption of capital inflows, passage of economic reform bills in the recently concluded Parliament session, lower current account deficit (CAD) in FY 2014 and pick-up of economic growth momentum from third quarter of current fiscal," it said.
While the rupee was the worst-performing currency in August 2013, it became one of the best performing ones in the emerging markets in the first fortnight of September 2013, showing a 4.2 per cent appreciation against USD between end-August 2013 and 13 September 2013, the report said.
At present, the rupee is hovering around the 62/USD level. The local currency had depreciated to an all-time low of 68.85 on August 28.