Rupee forecasts ahead of rest of Asian currencies

Strategists are raising their forecasts for India's rupee faster than for any other Asian currency as Prime Minister Narendra Modi's economic policies attract international investors.

The median estimate in a survey puts the rupee at 61 per dollar by the end of 2015, up from a prediction of 62.3 on June 30. While that still indicates a decline, it shows forecasters no longer expect a reversal of the Indian currency's world-beating 5 per cent gain of the past year.

India's progress in cutting its trade deficit by curbing gold imports and scaling back debt sales is making the nation more resilient to the prospect of higher US interest rates than its regional peers. International investors have pumped a record US$7.8 billion into the country's bonds this quarter.

"India is in a much better position to smooth currency volatility," said Khoon Goh, a senior foreign-exchange strategist at Australia & New Zealand Banking Group in Singapore.

The rupee has risen from an all-time low of 68.845 per dollar in August 2013, and has gained 1.6 per cent this year, touching a six-week high of 60.1975 on September 8.

Strategists are less optimistic about other Asian currencies on bets the Federal Reserve will raise the main US interest rate next year from a range of zero to 0.25 per cent. The 2.1 per cent jump in rupee forecasts this quarter compares with a 1.3 per cent increase for Indonesia's rupiah and a 0.3 per cent boost to estimates for the Philippine peso and Malaysian ringgit.