The Indian Rupee has fallen by its biggest margin in a week as concerns that the Federal Reserve will make reductions to its asset purchasing programme which has been boosting inflows of cash to emerging markets.
Persistent demand for US Dollars from the banks and importers as the US currency firms overseas has been the major cause of the Rupee’s declines against the ‘Greenback’.
The Federal Reserve begins its two-day meeting today, a month after Federal Reserve Chairman Ben Bernanke said that stimulus efforts could be scaled back if the US economy shows signs of making a sustainable recovery. Improving jobs data over the past few months has caused some investors to speculate that a cut must surely be due.
As a result of the speculation and uncertainty over whether the Fed will opt to cut its QE programme money has been pouring out of the emerging markets as investors favour the US Dollar. Global funds have so far cut holdings of Indian debt by $4.7 billion since May. The Reserve Bank of India maintained its repurchase rate at 7.25% yesterday as predicted by economists.
“Any hint of hawkishness out of the Fed could potentially impart further nervousness towards emerging markets in Asia, “said a currency strategist at Overseas-Chines Banking Corp “The RBI’s hawkish stance may do the Rupee no favours in the current environment.”
The US Dollar meanwhile has strengthened against the majority of its peers as economists raise bets that the Fed could soon announce a cut to interest rates.
Current Rupee (INR) Exchange Rates
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 91.6233 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 78.2198>
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.4468 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 46.5812 <
The Canadian Dollar/Indian Rupee Exchange Rare is currently in the region of: 57.3078 <
(Correct as of 11:35 am GMT)
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