Predict the future spot exchange rate (i.e. on March 31, 2014) of USD !

"# pair $ith %ustification and a&so co''ent on the Do&&ar (en exchange rate and the )uro Do&&ar rate.

Prediction of any currency is a very complex task and involves a host of factors ranging from estimation of the Current Account Deficit, Inflation trends, Interest Rate scenarios etc. In addition, the demand and supply should also be ascertained along ith technical factors and other fundamental reasons.

!he prediction or estimation of any Currency is based on the movement of the base currency to the "uoted currency. #ence it is e"ually important to gauge the movement of the base currency being the $%D. In addition, the movement of the currency for the past & ' ( months should also be monitored to ascertain the volatility and the range of the "uoted currency.

)ovement of $%D ' I*R As can be seen from the movement of the I*R against the $%D, there as a sharp increase in the price of the Rupee. !he rupee hich as "uoting against the $%D at around ++ in the year ,-., and Rs +(.+- in the month of )ay ,-.& suddenly depreciated to around Rs (/ in August ,-.&. !hat is a drop of nearly Rs .,.+- or ,, percent in a span of & months. !he drop as very sudden but not ithout 0ustification.

!he follo ing reasons are attributable to the fall of the I*R against the $%D. !ightening of the monetary policy by the R1I #uge demand $%D for high imports #uge Current Account Deficit 23 tapering by the $%

All these had a sharp reaction on the I*R and the rupee depreciated to Rs (/ being the orst performing Asian currency. %ubse"uent to %hri Raghuram Ra0an becoming the ne governor of the R1I, he

introduced a sle of measures ma0or measures ere as follo s4

hich changed to dynamics.

!he

Imposition of Duty on import of 5old and %ilver to the extent of .-6 Removal of allo ance of import of luxury items like !7, 83D, 8CD and other electronics thereby decreasing the imports and ushering greater demand for local industries.

Removal of demand of $%D for oil imports from 9il )arketing Companies by opening a separate indo for supply of $%D to 9)C.

% ap

indo

for *RI for repatriation of the foreign remittances

!his as further facilitated by the finance ministry and the industry ministry ith impetus to exports and clearing of other :oreign Direct Investments. In addition, the 23 by the $% as further postponed.

*uture prediction of the USD !"#

!he fruits of all the measures have slo ly started bearing fruit ith the %tock Indices hitting an all time high on *ovember ,-.&. !here has been a large inflo of foreign exchange. !he imports on account of gold has decreased from almost .+ billion per month to around ..+- billion per month. !he Current Account deficit is pegged at $%D +( 1illion hich ould be around &6 percent of the 5DP. In vie of the same, my assessment of the $%D; I*R by )arch &., ,-.< ould be to the tune of around +/=(-.

*uture prediction of the )uro USD

>ith no ma0or announcements against the 3uro and the stabili?ation of the 3uropean banks, the 3uro; $%D currency paid is expected to "uote around ..&(@ ' ..&A-

*uture prediction of the USD (en

!he Ben has lately depreciated against the $%D and crossed the .-- mark on concerns of large fiscal deficits, almost stagnant interest scenario hich ould not give hope to gro th and hence the Ben is expected to "uote around .-+ against the $%D by )arch ,-.<. (P&ease note + ,his is '- .ersion of the future prediction and other ans$ers 'a- /e different fro' '- .ie$s /ased on their esti'ation of .arious 'acro econo'ic factors)