Even as the domestic currency rupee continues to slide, shedding nearly 4.3% against US dollar in August, global firm UBS notes that corporates don’t expect a major slide going forward. The majority of firms (34%) expect the domestic currency rupee to trade in the 67-70 range against the US dollar (USD) over the next 12 months, according to UBS. “Around a quarter of firms expect it to weaken towards the 70-75 range. Overall, firms expect INR to recover to an average of 67-68 in the next 12 months,” said UBS in its latest report. Notably, the survey responses were part of UBS Evidence Lab which comprised of 267 C-suite executives (including CEOs and CFOs) in July 2019 to gauge the views of broader India Inc.
Also read: Mark Mobius says good time to invest in India, but here’s his biggest concern
Notably, the rupee has lost more than 4% in the previous month, even as a confluence of domestic and global factors weigh on the currency. Yesterday, the rupee appreciated by 38 paise to close at a two-week high of 71.42 against the US dollar on the back of a rally in domestic equities and renewed hopes of the US-China trade talks. “We expect the gradual depreciation bias in rupee to be sustained (UBSe: 72/73 for end-FY20/21). Even though we expect India’s external position to remain manageable (current account deficit below 2%), global risk aversion (trade war uncertainty and slowing global growth) could exacerbate the INR weakness,” UBS noted it its report.
Watch: How to file ITR-1 in less than 15 minutes
Amid the ongoing slowdown, nearly half of the executives expect only modest demand momentum of up to 10% over the next 12 months. “Indeed, the share of respondents expecting double-digit growth in overall demand for the sector has come down from more than 40% last year to only one-third now. Considering a sharp growth slowdown, there is no pressing need to undertake fresh investments by corporates,” said the firm in the report.