Rupee, which has gained 12.5 per cent against the dollar since March, will rise further against the greenback in the long run on the back of rising productivity and economic reforms, global investment bank Lehman Brothers said on Tuesday.
"India is moving into a new era of solid economic growth. Rising productivity, economic and financial reforms and urbanisation should support a long-term appreciation trend of the Indian rupee," Lehman Brothers said in a report.
The report, titled "India: Everything to Play For" said the productivity boom should lead to real rupee appreciation.
The report concluded that the rupee still has much to gain from the uptrend in investment and productivity growth with strong demographic and urbanisation trends in its favour.
The strength of India's productivity growth and rising differential with Asia (including Japan) and against the US are likely to provide more support to long-term rupee rise.
The rupee is still only 7.3 per cent stronger during the first half of 2007 than the previous ten-year average, suggesting there is ample space for the Indian currency to appreciate further.
India's growth acceleration is taking on key characteristics shown by other economies in Asia (especially Japan) during the early stages of their take-offs, the global investment bank said.
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