Rupee likely to return back to the 53-55 range in the medium term - ICICI Bank : Treasury Research

The Rupee has remained under pressure since the start of May-2013, with a depreciation of 3.5%.

The currency has been weighed down by the widening of trade deficit in April-2013, domestic political issues and a strong Dollar amidst rising expectations of tapering of QE by the Fed.

We expect the currency to receive support in the medium term and return back to the 53-55 range on improvement in current account deficit, robust capital flows and from RBI policy measures.

The trading though is likely to be choppy amidst global uncertainties like possibility of withdrawal of stimulus by the Fed and revival of Eurozone debt concerns. With several state elections this year and the General elections next year, domestic political dynamics will be a key input towards shaping market sentiment.

Overall, we expect Rupee to trade choppy, while returning to the 53-55 range in the medium term.

Source : Equity Bulls

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