Rupee to rise to Rs 45-46 per dollar by March 2012: Crisil

**New Delhi:**Rating agency Crisil today saidit expects the rupee to strengthen to Rs 45-46 level againstdollar in the next five months on the back of pick-up in FIIinflows towards early 2012.

The rupee is expected to strengthen to Rs 45-46 perdollar by March 2012, from the current lows of around 50,Crisil said in a report.

[caption id=“attachment_93082” align=“alignleft” width=“380” caption=“In a worst-case scenario, it said, a potentialdouble dip in growth in advanced economies could have asharper-than-expected impact on the Indian currency.Reuters”]  [/caption]

The rupee in the past one month has dived from 45 levelto near 50 levels against the US currency on continued FIIoutflows and strong dollar overseas.

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Rupee closed at 49.45/46 against dollar today.

The key assumption behind the expected recovery of therupee is that developed economies will witness slowdown, butthey will avoid another recession. In our opinion, this willlead to a pickup in FII inflows towards early 2012 as the riskappetite for investment in emerging markets returns, it said.

However, in a worst-case scenario, it said, a potentialdouble dip in growth in advanced economies could have asharper-than-expected impact on the Indian currency, causingit to slide further and prolonging its recovery.

The rupee fell to almost 50 against the dollar on 23September from 44.4 in July 2011. The fall is almost assteep as that during the peak of Lehman crisis in 2008, itsaid.

The rupee depreciation during the Lehman episode wascharacterised by a global recession and the consequent creditfreeze. The current slide of the rupee is due to two factors:rising demand for dollars by Indian companies, in

conjunction with reducing supply of dollars due to weak FIIinflows, it said.Repayment pressures on corporate India, rather thancapital outflows, seem responsible for the sharp weakening ofthe rupee, it said.

While rising risk aversion has led to portfolio outflowsfrom India in the past few weeks, the quantum of outflows hasnot been too large, it said, adding, in fact, the withdrawalof portfolio investments from India during August-September

2011 has been much lower as compared to October 2008 andJanuary-March.

PTI