RBI<\/a> has been buying dollars quite consistently over the past few weeks and months and has not let the dollar-rupee fall too much. In fact, data indicates that it has bought $35 billion between April and December last year,\u201d he said. In addition, the current account deficit (CAD) had fallen quite sharply as the imports had come down due to a slowing economy. \u201cWe have had some decent inflows both from portfolio as well as FDI,\u201d he added.<\/p>\nGoing forward, as the economy recovers, he said, the imports and trade deficit may rise, leading to a depreciation of the rupee. \u201cThe rupee should head towards Rs 73-74,\u201d he said. In the short run, the rupee would stay around Rs 72-72.5 assuming no adverse geopolitical events, he added.<\/p>\n
\u201cThus far, the rise in oil prices has been secular but not extraordinarily sharp unlike the spike seen following the Iranian strike on a Saudi oil facility in September,\u201d Edelweiss said in a report. It further expected dollar\/rupee to range 71.5-72.75, assuming Brent secular increase continues but does not surge exponentially.<\/p>\n
\u201cBrent is going to be the sole trump card of rupee and other domestic asset class movement in the near term. We note that every $10\/bbl increase in crude oil prices could effectively dent GDP growth by 15-20bps, CPI inflation by 30-35bps and CAD by ~0.5% of GDP. We expect India\u2019s net external accounts to remain comfortable in FY21, assuming Brent average $65-68\/bbl, with BoP surplus of $32 bn,\u201d it said.<\/p>\n
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