The Indian Rupee (INR) looks set to weaken to its lowest level in seven-weeks against the US Dollar (USD), is weaker against the Pound (GBP) and is softer against other major peers as it struggles under the strengthening US currency.
After last Friday’s strong Growth Domestic Product report out of the USA, expectations have increased that the US Federal Reserve is getting closer to raising interest rates. The report showed that the world’s largest economy expanded by 4.6% on a year on year rate in the second quarter of 2014, the fastest pace seen since 2011.
Also weighing upon the Rupee and other emerging market currencies such as the South African Rand are market jitters caused over the ongoing pro-democracy protests taking place in Hong Kong.
Pro-democracy activists are protesting against China’s move to introduce universal suffrage, one person, and one vote for the election of Hong Kong’s leadership with tough restrictions that make it impossible for critics of Beijing to get on the ballot.
With Hong Kong being a major financial centre in Asia, the markets have been disrupted slightly due to the closure of a number of major banks and company headquarters in Hong Kong’s financial district.
The conflict in Iraq is also weighing upon risk sentiment as the UK joined the USA and other allies in combat operations against the Islamic State.
Indian Rupee to US Dollar Exchange Rate Forecast
The Indian Rupee is widely expected to experience further declines against the US Dollar over the coming week as economists forecast that a number of key economic data releases will provide further support to the ‘Greenback’.
‘The US data is largely expected to be strong and investors have factored in the possibility of the Fed raising interest rates next year. The Rupee is likely to keep to the 60-62 per Dollar range unless something drastic was to happen,’ said Ashtosh Raina, a Mumbai based foreign exchange expert.
Traders of the Rupee should be aware that Tuesday sees the Reserve Bank of India announce its latest interest rate decision.
The majority of economists are predicting that policy makers will choose to leave rates unchanged at 8% for a fourth consecutive month.
The central bank is likely to delay making further rate cuts in an attempt to shield the Rupee from further gains made by the US Dollar and to continue its fight against inflation.
UPDATE
The Pound Sterling to Indian Rupee exchange rate exchange rate was trending in a narrow range on Tuesday. The Pound managed to hold its own against the Rupee even as the UK’s gauge of Consumer Confidence declined by more than anticipated.
Meanwhile, the USD/INR exchange rate faltered, hitting a low of 61.5500.
The decline in the US Dollar to Indian Rupee exchange was partly facilitated in a moderate softening of the ‘Greenback’ and partly caused by the Reserve Bank of India’s interest rate decision.
As forecast by economists, the RBI opted to leave interest rates on hold.
Today’s US news may see the USD/INR exchange rate register additional movement.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Indian Rupee,
,US Dollar,0.0163 ,
Indian Rupee,,British Pound,1.0022 ,
Indian Rupee,,Canadian Dollar,1.8141 ,
Pound Sterling,, Indian Rupee,99.7630 ,
Euro,, Indian Rupee,77.9320 ,
US Dollar,, Indian Rupee,61.4675 ,
[/table]
