The Indian Rupee is trading just above Monday’s all time record low closing level of 59.6750 but remains vulnerable to making further declines as a decline in inflows raises the risk of India’s current account deficit.
Since May 22nd when Federal Reserve Chairman Ben Bernanke first suggested that the Central Banks massive monetary easing programme could be scaled back, global funds have cut Rupee debt holdings by $5.4 billion. As a result the shortfall in India’s current account widened to a record 5% of Gross Domestic Product.
A Fed stimulus cut poses a risk not just to India’s capital account, especially given its current-account gap, but is also a “big negative for the rupee as flows dwindle further,” Religare Capital Markets Ltd. analysts including Mumbai-based Tirthankar Patnaik wrote in a report today. “We see the pain on the Rupee continuing for now, with some short-term support provided by lower gold imports in June.”
Rupee depreciation will have implications for India’s credit rating
Credit ratings agency Moody’s added to the currency’s woes after it revealed that the Rupee’s depreciation will have implications for India’s credit rating.
“The Rupee’s slide is a reflection of macro-economic challenges, which do affect the country’s credit profile.”Moody’s Investors Service Analyst (Sovereign Risk Group) Atsi Sheth said.
On Tuesday at the start of the trading session the Rupee managed to edge upwards by four paise against the ‘Greenback’ as exporters sold their Dollars and was supported by a higher opening in the domestic equity market.
Current Rupee (INR) Exchange Rates
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 91.9833 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 78.2679 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.5965
The Canadian Dollar/Indian Rupee Exchange Rare is currently in the region of: 56.8727 >
(Correct as of 11:00 am GMT)
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