Compared to other emerging market currencies, India's sizeable current account deficit ...

COMPARED TO OTHER EMERGING MARKET CURRENCIES, INDIA'S SIZEABLE CURRENT ACCOUNT DEFICIT KEEPS THE RUPEE VULNERABLE TO CHANGES IN GLOBAL FINANCIAL CONDITIONS, SAYS LEIF ESKESEN OF HSBC GLOBAL RESEARCH. SHOWS: SINGAPORE (JANUARY 6, 2014) (REUTERS - ACCESS ALL) LEIF ESKESEN, CHIEF ECONOMIST (INDIA & ASEAN), HSBC GLOBAL RESEARCH 1. (QUESTION GRAPHIC) "Will the strength of the U.S. dollar weigh on the Indian rupee and other emerging markets currencies?" 2. LEIF ESKESEN SAYING: "Well I think of course the INR (Indian rupee) is still somewhat susceptible to changes in global financial conditions, because despite the reduction we have seen in the current account deficit, it remains sizeable. Still with, India still depends more so than other emerging markets; not all, but some of them at least, on external funding. So of course they are susceptible to changes in that with the Fed tapering now underway, although in a more controlled manner, and that of course poses risks for India in that front. I would say however though, I wouldn't suspect that we are going to see the same type of gyrations we saw over the summer. I mean since then the current account deficit has narrowed notably. Funding conditions have improved. And yes Fed tapering is underway, but it's not being executed maybe in a more draconian fashion that a lot of market expects, a lot of market watchers were fearing over the summer. It's gradual tapering we are looking at. The Fed wants to be cautious about getting yields up in the U.S. and manage that very diligently. So I think we will not see the same sort of disruptions on that front. I would also suspect if the currency does get under more pressure as we saw over the summer, there would be a policy response to that, that would help alleviate some of the volatility. So it's probably going to hover around current levels. The level of volatility would be lower than what we saw over the summer. On balance, probably a bit of a bias to the downside to the currency, but not to a great extent, but volatility of course in the short term will be there." 3. (QUESTION GRAPHIC) "Will the rupee maintain its outperformance in 2014?" 4. LEIF ESKESEN SAYING: "I think as ...

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