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US Dollar Indian Rupee (USD/INR) Exchange Rate Strikes Record High, Emerging Market Sell-Off Intensifies

Indian Rupee Exchange Rates

USD/INR Exchange Rate Surges on Emerging Market Exodus

The US Dollar Indian Rupee (USD/INR) exchange rate struck a new record high today, amid a rout in emerging currencies.

At the time of writing USD/INR is currently up around 0.3% from this morning’s starting levels, allowing the pairing to break through 72 for the first time on record.

Indian Rupee (INR) Exchange Rates Nosedives as Emerging Market Chaos Grows

The Indian Rupee (INR) has plummeted alongside most of its emerging markets peers again today as markets continue to flock to safe-haven currencies such as the US Dollar (USD).

This is a result of growing global trade uncertainty as well as contagion fears surrounding the collapse of the Turkish Lira (TRY) and Argentine Peso (ARS).

While most currencies across Asia are feeling the pressure of sliding risk-appetite and a bullish US Dollar, the fall in the Rupee has been accentuated by the perception of a mild intervention by the Reserve Bank of India (RBI).

Sajal Gupta, head of rates and forex at Edelweiss Securities explains:

‘The key difference between India and other Asians is the pace of fall in the currency and shallow intervention.

‘The central bank sold $24 billion during the span when the rupee fell from 65 to the dollar to 69 while it has sold just about $5 billion when it moved from 70 to 72. It is a one-way street now and the pressure is likely to continue.’

Further aggravating the losses in INR are concerns regarding rising domestic inflation as well as the uncertainty of state elections later in 2018.

India’s Finance Minister, Arun Jaitley appeared definite in face of the Rupee’s recent losses, speaking late on Wednesday to say there was no need for a panicked reaction to the fall.

USD/INR Exchange Rate Forecast: Rising US Interest To Drive Further Losses in the Indian Rupee?

Looking ahead, the US Dollar Indian Rupee (USD/INR) exchange rate may continue to accelerate through to the end of 2018 as the Federal Reserve is expected to raise interest rates two more times in 2018, starting with a hike later this month.

This is likely to light another fire under the US Dollar, placing even further pressure on emerging currencies.

Meanwhile the release of India’s latest CPI figures could see the Rupee retreat even further next week, should they reveal that domestic inflationary pressure continued to build in August.