INR could drop to as low as 65.25/USD over two months - HSBC

Pradeep Khanna, HSBC’s head of global markets trading for India in Mumbai, said in a Bloomberg interview on Wednesday, the Indian Rupee is expected to weaken in the coming months, as global funds put a brake on their investments, as the nation’s debt and valuations for equities look expensive.

Key Quotes:

“I won’t be surprised if we drift down to 65-65.25 to the dollar over the next two months,”

“Equity valuations are stretched in India as company earnings haven’t changed much in the past two years while the market is much higher.”

“Clearly, a slowdown is expected over there,” noting that global funds, whose access to Indian debt is restricted, have “utilized about 90 percent” of their investment limits.

HSBC remains “constructive” on the INR from a carry perspective.