The stock market in India is set to plunge by more than 10 per cent by the end of August, the latest sign that the rupee is set for another significant depreciation.
The index of stocks, the main gauge of investor sentiment in India, will lose nearly a third of its value over the next year as the rupees weaken and the government is struggling to prop up the economy.
On Friday, the rupe fell more than 50 per cent against the dollar in a week, the biggest drop in the past two weeks.
The drop will not only dent India’s exports and consumer spending but also hit growth and inflation, said S.R. Rao, an economist at ETN Financial Services, which tracks the stock market.
India’s growth is expected to slow to around 6.7 per cent this year from 7.3 per cent in 2017.
India has already experienced a series of financial and economic crises in recent years, with the government blaming the economy for the current slowdown.
On Wednesday, Prime Minister Narendra Modi announced that his government would take the country out of a series on the economic health of the world, and focus on infrastructure projects.
India is set a target to create nearly 7.5 million jobs by 2022 and to double its gross domestic product by 2026.