New Delhi: India’s Rupee may decline to 95 against the dollar over the next year due to the fallout of Us-Israel and Iran conflict. The decline in Rupee would
put pressure on Reserve Bank of India (RBI) to take some measures if inflation rises, Goldman Sachs Group Inc.’s chief economist was quoted by Bloomberg TV.
“The rupee remains under pressure in our view, given the current account deficit is widening,” Santanu Sengupta told Bloomberg TV in an interview.
The economist warned that even as inflation remains under control at present, but if crude oil prices remain on the higher side and a weaker rupee filters through to consumer prices, India’s central ban will need to tighten. Sengupta added, such questions would arise later and not at present.
The Indian rupee crashed 25 paise to settle at record low of 92.65 (provisional) against US dollar. The RBI has been taking measures to cushion the fall in the Indian currency.
Notably, Goldman Sachs, its latest report, has reduced growth forecast for India this year to 6.5% from 7% and increased its inflation estimate by 30 basis points.
Sengupta is of the view that at present, the Indian government is using fiscal policy to cushion the economy from the energy shocks emanating out of the Middle East crisis, thus the RBI won’t need to act immediately, Sengupta said. He said RBI could likely provide liquidity support to the economy.
