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HSBC pegs India growth at 6.9% for FY14, sees rupee at 52 by December-end


The rupee is likely to recover to 52-mark against the US dollar by the end of this December and may recoup to the 49 level to the dollar by the end of next calendar year, HSBC said today.

"We expect the rupee to be at 52 level to the dollar by this year end and at 49 by the end of 2013," HSBC global forex strategy head David Bloom told reporters here. The rupee today closed down by 16 paise at 54.36 against the dollar.

Expalining the rationale behind the expected upward movement, Bloom said the local currency will witness a rise mainly on the back of weakness of the dollar and not any major domestic factor.

"The movement in the rupee will be mainly due to weakness seen in the dollar," Bloom said.

On the global economic scenario, HSBC Group Economist and Global Head (Economics and Asset Allocation Research) Stephen King said while the situation in the euro zone has improved in the recent past, recovery is not on the expected line in the US after the third round of the stimulus package.

King, however, added that the impact of the sovereign debt crisis in Europe is now showing its impact on the Asian and Latin American nations as well.

"The current problems of the Western economies are putting pressure on Asian and Latin American countries through weakness in their exports," King said.

Also, HSBC said the Indian economy, which is projected to grow at 5.7 per cent this fiscal, is likely to clip at a faster pace next fiscal at 6.9 per cent following the recent spate of policy reforms.

"We expect, the economy to grow at 5.7 per cent this fiscal and 6.9 per cent in the next financial year," HSBC India and Asean chief economist Leif Eskesen told reporters here.

The FY13 growth forecast is a bit higher than government's own growth assumptions, and way ahead of many of its own peers, which all have pegged growth this year falling to around 5 per cent.

The IMF had recently pegged the growth this calendar year at a poor 4.9 per cent, while Finance Minister P
Chidambaram early this week had said growth would hit a decadal low of 5.5 per cent this fiscal.

Basing his optimism for higher growth next fiscal, he said policy reforms, traction in infrastructure projects and rise in investment would be the key factors driving growth next fiscal.

"We see early signs of reforms, which is likely to improve the investment climate. Also, some traction in
infrastructure projects is expected. Further, some stabilisation in global factors will also help growth next
fiscal," Eskesen said.

Talking about inflation scenario, he said inflation is likely to go up in the near-term after which it is likely to
moderate. Wholesale price index based inflation stood at 7.81 per cent for September, much above the comfort level of the central bank, which held back a much-sought after policy easing last month-end.

Talking about the way ahead for the economy, Eskesen said structural reforms along with loosening of monetary policy would support future growth.

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