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Rupee seen at 48/$ by end-March

The rupee is expected to remain stable in the near term helped by continuing foreign capital flows and a current account surplus, a Bank of America report said on Thursday.

Bank of America expects the rupee, currently overvalued by three per cent on a trade weighted basis, to depreciate just 1.6 per cent by December to touch 47.75 per dollar and fall 2.2 per cent to 48.0 by March-end.

The rupee, currently trading at 46.94/95 per dollar, lost nearly seven per cent in calendar 2000 on slowing capital flows and high oil prices.

Capital flows have been strong this fiscal year with foreign portfolio investors buying a net $2.25 billion of Indian stocks and bonds in 2001 so far, compared to $1.56 billion in calendar 2000.

The report said if global oil prices remain around $25 levels it will help India to post a current account surplus

"We project the current account to be positive this fiscal. We have assumed export growth of 5-7 per cent, non-oil import growth of 3 per cent, oil imports volume growth of 5 per cent and average Brent price at $25 per barrel", the report said.

Exports which grew a scorching 19.8 per cent in 2000-01 is expected to fall due to a global slowdown. Non-oil imports declined 14.7 per cent during the last financial year while oil imports grew 62.3 per cent to $15.65 billion.

Bank of America expects strong capital flows along with a capital account surplus to give a boost to forex reserves and help it touch $50 billion at the end of the fiscal year. Reserves were at $42.782 billion for the week ended May 4.

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