INR: An Attractive Long-Term Play

A turn in momentum, coupled with a breather in local equities, suggest that the Indian rupee could be vulnerable to a near-term correction. In the event of a sell-off, however, we believe that the unit is well supported at INR46.00/US$, and a consolidation at this level could set the stage for renewed buying pressure over the coming months. Such a scenario would chime with our long-term fondness for the currency against developed world majors, as reflected in our end-2010 and end-2011 FX projections of INR43.50/US$ and INR41.75/US$, respectively.

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