Rupee to get boost from bank recap

A report has said that the rupee is likely to get a boost from the government’s PSU bank recapitalisation programme which is expected to support private capex recovery and increase foreign investor interest in domestic equity markets. Economists at Morgan Stanley said “stronger growth and INR correlations with equities are supportive of further currency gains.” They believe the announcement is not expected to impact fiscal deficit position of the county and inflation number, but is likely to have a positive impact on the economic growth parameter. “INR (rupee) should receive support from India's push to growth via a USD 32.5 billion recapitalisation of its public sector banks,” the report said. It added, “We think that INR remains a high-quality emerging market story showing low sensitivity to rising US yields.”