Although the US Dollar posted widespread declines as the North American session opened and Fed tapering speculation took its toll on the safe-haven asset, the Rupee softened against its US peer as the Reserve Bank of India’s surprising rate cut triggered steep losses in the local share market.
The US Dollar to Indian Rupee Exchange Rate was in the region of 62.6000 as of 15:15 GMT
Last week the Rupee rallied as the Federal Reserve took investors by surprise by refraining from tapering stimulus.
Economists were expecting the level of bond buying to be reduced by between 5 and 10 billion Dollars, so the manoeuvre inspired extensive market volatility and helped emerging-market assets like the Rupee climb.
However, after the Reserve Bank of India made its own surprising decision on Friday the Rupee shed its short-lived gains.
The US Dollar to Rupee (USD/INR) exchange rate hit a high of 62.7200
As last week came to an end the RBI unexpectedly increased the benchmark interest rate by 25 basis points, the central bank’s first rate increase for nearly two years.
According to the RBI’s new Governor Raghuram Rajan, the step was a necessary one if inflation is to be combated, but it continues to put pressure on the Rupee.
The ongoing Federal Reserve tapering speculation is also having an adverse impact on the Rupee. After Fed official James Bullard intimated that easing could be trimmed in October, the Rupee extended declines against the ‘Greenback’.
According to forex trader Ashtosh Raina; ‘The Rupee is likely to again trade with a weakening bias for the rest of the week as Fed tapering fears are again haunting the market. They had to come at some point, but its come a bit early after […] Bullard’s comments.’
Meanwhile, India’s Finance Ministry has asserted that the intrinsic value of the Rupee should make it worth between 58-60 Rupee per Dollar.
Economic Affairs Secretary Arvind Mayaram asserted; ‘The intrinsic value of the Rupee comes from its purchasing power. The intrinsic value of Rupee in Real Effective Exchange Rate (REER) terms could be somewhere between 58-60. […] I do believe that when tapering happens then there will be outflow of capital but the fact also remains that we have enough ammunitions in our hand… And therefore there is no room to be fearful of Rupee taking a tanking.’
The main piece of Indian economic data to watch out for this week is the nation’s current account figures, due out on Friday at 12:30 GMT.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 100.5040 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 84.5726 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 62.6000 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.0381 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.4715 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.6716 >
(Correct as of 15:15 GMT)
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