Global factors like US Presidential elections and domestic factors like demonetisation pushed Rupee to its lows of Rs 68 to a dollar level late last calendar year. 

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Rupee, on Tuesday, was trading at Rs 66.64 -- a level previously seen before Prime Minister Narendra Modi's demonetisation drive in the first week of November 2016. 

Demonetisation effect did take its toll on the Rupee as it fell to 68-mark against dollar in January 2017. However, things have turned positive since then for the Rupee. 

Madan Sabnavis and Manisha Sachdeva, economists at Care Ratings said, “A strong current account balance was the major cause of a stable rupee combined with measures taken by the RBI to counter volatility due to extraneous reasons. A major achievement was in maintaining this rate when there were outflows of the FCNR (B) deposits which were around $25-30 billion during the last quarter of 2016."

What's ahead? 

The duo at Care Ratings said, “Contrary to expectations that the Rupee will move down during the year, the rupee has shown remarkable resilience, this can be traced to the fundamentals which have been strong.”

They said, "The most important factor will be the movement in trade balance. Contrary to expectations, crude oil price has been fairly stable in the range of $ 55-57/bbl which will provide a cushion for the imports bill."

However, Care Ratings cautioned, "While the near term forecast would be around Rs 67/$, the rupee may on balance move towards the 69 mark towards the end of FY18 with there being an incentive to let the rupee find its level to support exports at a time when they would be increasing."