Although some industry experts have questioned the recent steps taken by the Reserve Bank of India to bolster the flagging Rupee, the central bank demonstrated its commitment to the cause once again by taking additional measures yesterday.
The US Dollar to Indian Rupee Exchange Rate was in the region of 59.1600 as of 10:30 GMT
Some economists fear that the central bank’s decision to tighten liquidity and make it increasingly difficult for lenders to get their hands on funds will prove damaging to the already concerning economic growth of a nation struggling with a record-high current account deficit.
The USD/INR exchange rate hit a low of 59.1600
The steps taken by the RBI last week did allow the Rupee to regain some stability after falling to record-lows against the US Dollar earlier this month, but by continuing to take action it is becoming clear that the RBI is determined to bring about financial stability – even if that means temporarily abandoning growth-boosting measures.
As one chief economist with Barclays stated: ‘These measures of trying to reduce domestic liquidity and making funding costs higher may not be very effective to support the Rupee. There is a risk that capital inflows in the equity market can get dented as these steps but more pressure on growth in the medium term.’
The central bank’s efforts did help the Rupee advance on the US Dollar, despite the American currency broadly strengthening as investors turned to safe-haven assets in the wake of disappointing news from China.
The Rupee also gained on peers including the British Pound and Euro.
The RBI’s next policy meeting is scheduled for July 30th and it will be interesting to see what stance it adopts.
Some analysts are expecting the RBI to announce its intention of intensifying attempts to drain liquidity, perhaps even through an outright hike in the policy rate.
Additional movement in the USD/INR pairing could occur following the publication of US new home sales figures. A disappointing result will make the likelihood of the Federal Reserve tapering stimulus increasingly unlikely, and the Rupee could continue to advance 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: 90.9318 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 78.2749 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.1600 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 54.9621 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 47.1354 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 57.4259 <
(Correct as of 10:30 GMT)
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