The rupee is forecast to weaken to 75 against the American greenback by the end of 2019 on a widening current account deficit and tighter global financing conditions. The Indian currency has enjoyed a recent spate of recovery off the back of falling oil prices but is still set for its worst yearly performance in five years. At its lowest point this year, the crisis-hit currency tanked as much as 14 percent against the US dollar. The Indian currency crashed through the 74-barrier and reached an all-time low of 74.39 against the US dollar back in October, partly fuelled by soaring oil prices.
In its forecast, Fitch Ratings pointed to a weakening rupee in a year which will see the Indian general election take place by May.
Fitch said: “The widening of the current account deficit amidst tighter global financing conditions should put downward pressure on the currency, and we forecast the INR to weaken to 75 against the dollar by end-2019.”
Higher interest rates and rising import prices are also expected from the depreciating rupee, according to Fitch.
As of 15:15 GMT, the rupee is trading at 70.8075 against the US dollar.
The Reserve Bank of India (RBI) opted to keep interest rates on hold this week as it maintained its “calibrated tightening stance” as expected by markets.
The benchmark repurchase (repo) rate remained unchanged at 6.5 percent.
Monetary policy committee (MPC) members have now kept rates on hold for the second meeting in a row, having previously raised them twice this year.
The RBI said in a statement: “The time is apposite to further strengthen domestic macro-economic fundamentals.
“Even as inflation projections have been revised downwards significantly and some of the risks pointed out in the last resolution have been mitigated, especially of crude oil prices, several uncertainties still cloud the inflation outlook.”
The rupee has lost ground against the US dollar as oil prices began to pick up this week.
Monday marked the biggest loss registered in a single session since August for the rupee as it tumbled through the 70-barrier against the US dollar.
Most major Asian currencies have suffered this year amid a strong US dollar, though many have made some gains this week after the United States and China agreed to a 90-day truce in their trade war.
Last week saw India report a slowdown in economic growth.
The economy grew by 7.1 percent in the July-to-September quarter, down from 8.2 percent in the previous period.
Bitcoin Market Price Chart in RealTime