Eyeing stable rupee, JPMorgan AMC to hike exposure to India

Foreign flows into countries like India and other emerging markets will be dependent upon the direction of the currencies, says Richard Titherington of JPMorgan Asset Management. And the good part, he says, is that EM currencies right now are pretty stable. "If you see a stable currency environment and an improving economic picture in India, as we go into 2014, I think you will see money flowing into India," he told CNBC-TV18 in an interview. 

He expects the rupee will be more stable than other comparable currencies. "The current account deficit (CAD) has come down; reserves have gone up. The central bank has got good credibility in international markets and those are all very positive developments for India," he says.

Also Read: India, EMs at risk of FII outflows post taper: Macquarie

Meanwhile, the US Federal Reserve's decision this week to reduce the money-printing that has fuelled demand for risky assets is expected to drag on growth in emerging markets next year, with Brazil, India, Indonesia, South Africa and Turkey seen as especially vulnerable to a sudden withdrawal of foreign cash.

But with elections due in all of the " fragile five " next year, politicians are likely to spend money to try to keep voters sweet rather than taking a more cautious approach.

"The outlook for the elections is difficult to predict. I think that under most scenarios you will have a more effective government after the election than we have seen over the last couple of years. And if that proves to be correct, that would lead us to be more positive on India," Titherington says.

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