India’s rupee may climb 10 percent during the first quarter of 2010 should it breach the 62 percent retracement of its decline to a record low, Brown Brothers Harriman & Co. said.

The rupee may appreciate to a 16-month high of 41.8175 per dollar after it breaches the U.S. currency’s “key support” level of 45.776, Win Thin, a New York-based currency strategist at Brown Brothers, said by telephone. The rally would take the currency to its strongest level since July 24, 2008.
A government report this week showed Asia’s third-largest economy grew at the fastest pace in six quarters in the three months ended Sept. 30.
India’s $1.2 trillion economy may grow about 7 percent in the year to March 31, Finance Minister Pranab Mukherjee said in New Delhi after the statistics bureau released figures.
“Once you break 62 percent support, that sets up the way to an extreme level,” Thin said, citing Fibonacci chart patterns. “Fundamentally India looks good in terms of growth and people are talking about interest rate increases.”
To adherents of Fibonacci analysis, which uses a system pioneered by 13th century mathematician Leonardo Pisano that discerns ratios from proportions found in nature, the performance of an index when it approaches the 62 percent retracement level can be used to forecast whether it will keep climbing or retreat.
The rupee strengthened 0.4 percent to 46.3175 against the dollar Tuesday in Mumbai, according to data compiled by Bloomberg. Thin’s chart takes the rupee’s decline to its record low of 52.185 per dollar on March 3 as starting in July last year.
The currency has appreciated 5 percent this year, the third-best performance among Asia’s 10 most-active currencies. Foreign investment in Indian equities rose 255 percent in the year through Nov. 27, the most in emerging markets throughout Asia, Thin said.
“Markets appear to be recognizing India’s relatively strong growth and equity outlook,” he said.
(Source: Bloomberg)