As the local session began the Rupee was heading for its best week so far this year after the new Governor of the Reserve Bank of India made his presence felt and his intentions for the struggling nation clear.
Over the past five days the Rupee has advanced by 2 per cent against the US Dollar.
The US Dollar to Indian Rupee Exchange Rate was in the region of 63.7500 as of 11:35 GMT
However, with economists forecasting that today’s US retail sales report will show improvement (potentially adding to the case for the Federal Reserve tapering easing) and India’s growth forecast being cut, the Rupee has pared its advance slightly.
Today the economic advisory body of Prime Minister Manmohan Singh slashed its predictions for growth for the year to March 2014 from an initial estimate of 6.4 per cent to 5.3 per cent – significantly lower than the average 8 per cent growth recorded over the past 10 years.
In a statement the chairman of the Economic Advisory Council asserted; ‘The current stance of monetary policy has to continue until stability in the Rupee is achieved. Thereafter, if the current trend in the moderation of wholesale price inflation continues, which is in fact expected, the monetary authority can switch to a policy of easing.’
The US Dollar to Rupee (USD/INR) exchange rate hit a low of 63.5200
He also added; ‘The Rupee at the current level is well corrected. Stability is returning to the foreign-exchange market, As capital flows return and as current-account deficit begins to fall, this tendency will strengthen.’
Although the Rupee did slide modestly after these comments were issued, declines were limited in the wake of yesterday’s report showing that India’s industrial production unexpectedly climbed by 2.6 per cent year-on-year.
While the Rupee is certainly ending the week stronger than it began, the emerging market asset could weaken against the US Dollar before the close of the North American session.
If US retail sales climb by the 0.5 per cent expected, or beat expectations, the odds of the Federal Open Market Committee trimming stimulus when it meets next week will rise and the Rupee could suffer as a result.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 100.7860 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 84.6775 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 63.7500 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.9461 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 51.9325 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.6359 <
(Correct as of 11:35 GMT)
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