Yesterday the Reserve Bank of India welcomed a new Governor and took decisive action to restrain the Rupee’s recent downward trajectory. Consequently, the emerging-market asset was able to advance on its US counterpart and edge away from the historic lows recorded over the last few weeks.
The US Dollar to Indian Rupee Exchange Rate was in the region of 66.0500 as of 10:15 GMT
The Rupee was able to extend gains after new RBI Governor Raghuram Rajan outlined a plan to offer concessional swaps for foreign-currency deposits.
Bank of America Merrill Lynch expects this move to increase the authority’s reserves by as much as $10 billion.
Rajan also asserted that restraining inflation expectations and bringing about fiscal stability are the RBI’s central goals, commenting that ‘this means low and stable expectations of inflation, whether that inflation stems from domestic sources or from changes in the value of the currency, from supply constraints or demand pressures.’
According to strategist Vivek Rajpal, ‘Rajan’s immediate challenge is to stabilise the currency and then get back to addressing growth concerns. A lot depends on how the global picture pans out.’
The US Dollar to Rupee (USD/INR) exchange rate hit a low of 65.5300
After Rajan made his first address as Governor the Rupee briefly surged by 2.3 per cent to brush 65.53 before a downward correction saw it trading in the region of 66.02 Rupee per Dollar.
However, if tomorrow’s US non-farm payrolls report adds to the case for the Federal Reserve tapering stimulus over the next few weeks, emerging-market assets like the Rupee are likely to bear the brunt of a bullish US Dollar.
As Yuki Sakasai of Barclays Plc notes, ‘The outlook for the US economy and monetary policy will have a bit impact over the Dollar in the medium to long term. Our view remains that the Fed will decide to taper easing in two weeks.’
Today’s US initial jobless claims figures are likely to impact the Rupee, as are US factory orders figures.
The G-20 summit in St Petersburg will also be a big focus for investors in the hours ahead as the thorny issue of Syria comes under discussion.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 103.0310 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 86.9945 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 66.0500 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.3422 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.1056 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 63.1303 <
(Correct as of 10:15 GMT)