Stronger rupee to further hit exports: Goldman Sachs

May 25th, 2009 - 1:42 pm ICT by IANS  

New Delhi, May 25 (IANS) Already hit by a sluggish offshore market, export-dependent sectors such as information technology (IT), textiles, pharmaceuticals and export-oriented oil refiners will now likely be hit by the appreciation of the Indian rupee, says global investment bank Goldman Sachs.
“We expect the Indian rupee to appreciate further from current levels as the stable government and relatively resilient domestic demand becomes a key catalyst for foreign inflows,” said Goldman Sachs economist Tushar Poddar Monday.

However, according to Goldman Sachs, with the Indian currency strengthening, sectors reliant on imports are expected to gain.

“Oil distribution, fertilizer and capital goods companies are amongst the largest importers and are likely to benefit from a stronger Indian rupee. On the other hand, IT, textiles, pharmaceutical, and export-oriented oil refining are likely to be hit by a strong Indian rupee,” Poddar said.

Following the unexpected margin of victory for the Congress-led coalition government, the rupee has appreciated nearly 5 percent against the US dollar.

Poddar said deleveraging pressures would ease further and that the basic balance of payments would turns positive in 2009-10 due to narrowing trade deficit.

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