Rupee may fall by another 4% as forex loan paybacks loom

http://economictimes.indiatimes.com/markets/forex/rupee-may-fall-by-another-4-as-forex-loan-paybacks-loom/articleshow/16358821.cms

The relative calm in the currency market may be disturbed in the next few weeks as corporate demand to repay about $8 billion of maturing loans and a likely slowdown of inflows due to revival of troubles in Europe put pressure on the rupee. 

The currency, which acquired the distinction of being the worst performer in the region last year, may tumble about 4% as the demand for the greenback remains strong and also because of high crude oil imports as the government continues to dither in passing on high prices to customers. 

With the central bank maintaining that its strategy is to avoid volatility in the currency market and not target a particular level, economists, including Indranil Sengupta at Bank of America Merrill Lynch, expect a steady fall to at least 57 to the US dollar. 

"ECB redemption will weaken the rupee, but if there is some policy action being taken on the FDI front by the government, then we could see some flows to offset the negative bias," said Naveen Raghuvanshi, AVP,Development Credit Bank. 

Foreign loans, including convertible bonds, worth $8 billion, are estimated to come up for redemption in September and October, while loans worth $23 billion will have to be repaid by the end of the fiscal. With inflows likely to thin down if fresh troubles brew in Europe, Greece is struggling to meet the austerity measures and a German court is expected to rule on the European bailout package.