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The rupee will remain a regional underperformer in 2012 due to the country’s fragile external position, Royal Bank of Scotland said.
“July-September FY12 (fiscal year ending March 2012) external data underscores our longstanding view that the INR would remain a regional underperformer in 2012,” RBS said in a note dated Monday.
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The size of the current account deficit, short term external debt and the high share of portfolio capital and external borrowings in external reserves highlight a fragile external position, RBS said.
The bank said rupee valuations that are close to 2009 lows look attractive but are more reflective of the currency’s poor fundamentals.
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