Nomura says its FX valuation model shows that the rupee is still about 17.6 per cent overvalued, giving more room for weakness.
Nomura says the chances the government or authorities implement measures soon have risen, now that the rupee is trading below 60
to the dollar.
"We doubt the RBI can continue to intervene aggressively, as the more it intervenes, the greater the vulnerability to further capital outflows," the note says.
