See one more RBI rate cut; rupee to depreciate:CLSA's Malik

See one more RBI rate cut; rupee to depreciate:CLSA's Malik

On the currency front, it is still more of a dollar story over the next 12-months and rupee will depreciate gradually with the dollar strengthening, says Rajeev Malik, Senior Economist at CLSA.


Reiterating what Chris Woods said earlier in the CLSA press conference, Rajeev Malik, Senior Economist at CLSA says that India remains attractive on a relative basis on back of a pro-growth government. For India, there has been lot of macro stablisation that has taken place in terms of inflation etc., but the anxiety in terms of pickup in investment cycle remains and is likely happen in two parts. The first part is already in the works with lot of delayed projects having come on board. The second part, which is the private capex picking up, there is some uncertainty and is likely to be more of an FY17 story. Although people had very high expectations from Modi Government, it has done quite and effective job of meeting peoples expectations, believes Mallik. So, there is sill a healthy reset of investors’ expectations from the government. With regards to fiscal deficit target for FY17, he is doubtful of the government managing to stick to it. However, the new monetary policy framework has been good initiative, which will help in bringing down inflation even when growth begins to pick up, he adds. He expects only one more rate hike from RBI but after a period of long pause. On the currency front, it is still more of a dollar story over the next 12-months and rupee will depreciate gradually with the dollar strengthening. There is improvement taking place albeit at a slower pace, but the direction is there. “The shortest distance between two points in India is never a straight line and secondly, things are never as good, or as bad as people make out them to be,” says Malik. According to him Big Bang reforms have not taken place and are unlikely to happen but one cannot dismiss the cumulative impact of many small reforms initiated by the government. “’Reforms’ in India is an abused word – any action becomes a reform. So it is a word that has lost lot of its significance,” he adds.

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Source:Moneycontrol.com