Rupee may hit 100 against the dollar in future, says Marc Faber

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Rupee may hit 100 against the dollar in future, says Marc Faber

Faber said the rupee could hit 100 to the dollar over the next few years, adding that given India's fiscal position - "not particularly good" - it has to either increase interest rate meaningfully or let the rupee depreciate over time.

Back in March, when the Sensex was on its upswing, going on to double in the next six months, Marc Faber had said it could "easily" fall 20% to a sub-30,000 level this year. So, with the editor of The Gloom, Boom & Doom Report now making a prediction about the rupee, ears are perking up.

On Tuesday, Faber told ET Now that the rupee could hit 100 to the dollar over the next few years, adding that given India's fiscal position - "not particularly good" - it has to either increase interest rate meaningfully or let the rupee depreciate over time.

Significantly, the marketing guru explained that while the rupee looks oversold and could rally a bit, lifting to the 71-72 levels, it won't last long. According to him, the local currency could depreciate 5-10 per cent annually over the next few years and may touch the 100 mark. It weakened by 9 paise to Rs 73.92 against the greenback in early trade today on increased demand for the American currency from banks and importers.

According to The Economic Times, Faber added that the fragility of financial markets - already "very fragile" in the beginning of the year - has only been increasing due to the tendency among central banks to step back from asset purchases and get interest rates to adjust on the upside gradually. And picking on China for a trade skirmish, he believes, was a "bad idea" by the Trump administration.

US President Donald Trump's confrontation with the world's second-largest economy, which is not only its biggest trading partner but also a large buyer of US assets, has disturbed financial markets globally. Hence, they are adjusting on the downside. Stocks in Argentina, Brazil, Turkey and parts of Asia have all corrected materially.

US stocks have taken a beating, too. The 7 per cent drop they have posted against their peak levels is not meaningful, but it may become meaningful, Faber added. Furthermore, global liquidity has not been shrinking, but growing at a diminishing rate.

Nonetheless, Faber claimed that some of the emerging markets (EMs) now boast better financials compared to 1997, adding that he would prefer to buy into EMs than developed markets now.