"There is little disagreement that the rupee is headed lower by end-May 1999. A probabilistic assesment of the respondents indicates a roughly bell shaped curve with 50 per cent predicting the rupee to be in the 43.5-44 range. As such the bias of the distribution points with the median at 43.70 is oriented towards the left of the dispersion range. This is quite distinct from the results of our second quarter 1998 polls which generated distribution points having a right bias. The difference is significant. It indicates a decline in the risk premiums of the rupee over the past six months," the survey said.

The survery states that the changed domestic and international marketconditions are responsible for the lower premiums. In June, the unintended conseqences of India's nuclear blasts had drastically undermined the rupee sentiment. Fears of a Chinese yuan devaluation, too, had hurt the rupee.

"But today the circumstances are different. Corporate players are comforted by the roaring success of the Resurgent India Bond flows which replenished the Reserve Bank dollar resorvior. Meanwhile, Chinese currency devaluation fears too have largely evaporated in the wake of a relatively weaker global US dollar. In the changed environment, corporate players perceive the RBI to be in a much better position to manage the future dollar resource shortfall and engineer a calibrated depreciation of the rupee," the survey said.

The survey's finding on the onshore swap premiums also corroborate such a viewpoint. Nearly three-fifth of the respondents expects the six months annualised premiums to range between 7.5 per cent and 8.5 per cent in February 1999, down from the 10 per cent expected sixmonths ago.

The survey also shows that corporate treasurers do not see any significant turnaround in the local equity market performance. Treasurers expect the BSE Sensex to edge up to no more than 3,250 in the next six months. The main reason is the Unit Trust of India's September revelation that reserves of its flagship US-64 had turned negative. "Only the possibility of an economic revival can buoy sentiment and sustain the future flow of foreign capital and appreciation in the Indian stock markets," the survey said.

On the interest rate front, there is a general consensus that base lending rates will remain rangebound in the next six months. But respondents believe that the bias for interest rates remains on the upside. "As long as the rupee continues to be under downward pressure and the government's fiscal position is unhealthy, Indian interest rates will struggle," the survey said.

The poll also suggests that corporate players are not too optimistic with the real economy's prospects for the nextsix months. Any revival appears to be way in the future, the poll concludes.