Madan Sabnavis, chief economist, CARE Ratings

For the rupee to stay robust, both the current and capital account need to be strong and that doesn’t seem likely. In the current account, we could see a decline in remittances and software receipts. The first would be triggered by falling oil revenues in the Gulf impacting remittances from Indians employed in the region. Further, Trump’s curbing of H1B visas would have a direct impact on software receipts. Besides, as interest rate in the US inches higher, we should see the FPI flows into the Indian debt market ebbing. High interest rates in the US will also scuttle the possibility of external commercial borrowings by companies and higher deposits from NRIs. Further, the RBI would not want the currency at such levels as it will hurt competitiveness of exporters. Over the next six months, we could see the rupee head lower to 66.5.

Srinivas Varadarajan, head, fixed income and currencies, Deutsche Bank India

Technically, we expect the rupee to strengthen further. The currency could rise to 64.80 and consolidate at those levels. On the fundamental side, we have done well in terms of inflation, fiscal deficit and the current account. The strengthening rupee is not necessarily negative for our current account, given the finance ministry’s strong focus on keeping fiscal deficit under check despite flexible inflation targeting. The government has done a good job of managing the fiscal deficit and this should give confidence to foreign investors. Hence, we are seeing robust FII and FDI inflows. And if we start seeing a V-shaped recovery in the backdrop of GST, the stage could be set for a sovereign upgrade which will be positive for the rupee in the medium term. The RBI moving to a more neutral policy framework is also helping the rupee.