Dollar expected to fall below Rs 50 in 3 months: ASSOCHAM

The dollar is expected to fall below Rs 50 in the next three months and is expected to stabilise around this level due to a host of policy reforms, to a forecast by an ASSOCHAM study.

Return of FIIs into the Indian market as well as the green back is expected to weaken against major currencies.

"The courageous decisions on FDI in multi-brand retail and hiking diesel prices in the face of widespread political opposition were the turning point. It so happened that these decisions coincided with the quantitative easing in the US and Europe resulting in rush of liquidity in the global markets,” ASSOCHAM president Rajkumar N Dhoot said.

Rupee is expected to gain is based on several factors like reduction in merchandise imports, upbeat mood among those who want to bring in foreign direct investment, release of funds from the dollar assets in the global markets and the foreign institutional investors betting again on the Indian equity.

Nalini Rao, senior research analyst at Angel Commodities and Currencies also echoed the same view, "Reforms like FDI in multi-brand retail and other such reforms taken by the government will increase the dollar inflow which will eventually cause the rupee to appreciate against the dollar."

With the fall in the rupee crude oil and raw gold imports will become cheaper. These two items are the largest in the country’s import basket and big grains on the country’s current account deficit.  Besides other imports such as pulses, edible oil would also see easing of pressure.

If the trend of dollar depreciation continues and there is some downward movement in the international crude prices, there could be a pleasant surprise in terms of the oil marketing companies even reducing the pump prices.