By Jeremy Schwartz:
By Bradley Krom
By May 12, the world’s largest democracy will have headed to the polls over the course of several weeks to elect a new government. Indian equity markets are rising to all-time highs on the news that the Bharatiya Janata Party’s (BJP) Narendra Modi will be elected the next prime minister of India. Prices are rising on the hopes that he-seen as a pro-market, pro-reform agenda candidate-will be able to re-energize the Indian economy by reducing corruption and cutting red tape. With equity markets already rebounding on the news, we believe that increasing allocations to the rupee may be a prudent way to bet on renewed optimism in India.
Potential Flows into the Indian Economy Support the Rupee
We believe that the Indian rupee can continue to rise for several reasons:
- A stronger foundation provided by credible central bank policy
- Optimism that a BJP-led government will enact changes