Even with US data disappointing expectations over the last few weeks, economists were still expecting the Federal Open Market Committee to taper stimulus by between 5 and 10 billion Dollars.
Consequently, investors have been a bit on edge over the last few days, with currencies experiencing notable fluctuations.
The US Dollar to Indian Rupee Exchange Rate was in the region of 61.7000 as of 10:20 GMT
But, with the Fed deciding to continue with its 85 billion Dollar bond buying programme until the US economic recovery picks up, the safe-haven ‘Greenback’ has tumbled and the Rupee has surged to a one-month high.
During a news conference Fed Chairman Ben Bernanke asserted; ‘There is no fixed calendar schedule. I really have to emphasise that. If the data confirm our basic outlook, if we gain more confidence in that outlook… then we could move later this year.’
Other higher-risk currencies, like the South African Rand, also advanced.
In response to the Rupee’s 2.7 per cent rally, emerging market strategist Koon Chow observed; ‘The surprising Fed decision is naturally supportive of risk appetite in emerging markets. […] The effect on the current account-deficit countries could be larger. As their currencies rally, some of the priced-in expectations of aggressive monetary tightening may be unwound as well, with local bonds enjoying a lift.’
The US Dollar to Rupee (USD/INR) exchange rate hit a low of 61.6450
During the European session disappointing UK retail sales figures helped the Rupee advance on the Pound.
The Rupee could consolidate and extend gains against its US rival during North American trading if US initial jobless claims fail to meet expectations.
US existing home sales and leading indicator figures will also be of interest.
With the Reserve Bank of India due to deliver its rate decision tomorrow, following Raghuram Rajan’s first policy meeting as Governor, additional Rupee volatility could occur this week.
Economists have forecast that the central bank will hold the benchmark rate at 7.25 per cent.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 99.2493 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 83.7747 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.7000 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.7689 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.0280 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.5844 >
(Correct as of 10:20 GMT)
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