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Currency Turnaround

The Indian currency has slowly started to recover from the battering it took last year and has reached a seven month high of 68.53 to the US dollar due to many reasons, this year. The in-flux of large scale foreign investments into equities has helped the currency stabilize at a fast pace. Foreign investors bought in a net of $3.3 Billion of shares through March 18th, which accounted for even more than half of the total $5.6 Billion of in-flows year-to-date. It gained a good 1.8% compared to the degradation of 8.46% in 2018 and has gained a place among the best performing currencies in emerging markets this year.

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The sudden turnaround of Rupee has likely resulted due to growing optimizing of Prime Minister Narendra Modi’s party, Bharatiya Janta Party, winning this year’s election. And this rising belief has resulted in the inflow of over $2.4 billion into equities this month, taking the net foreign inflow to $4.7 billion this year. Though many experts doubt that this sudden rise will continue at an even pace as for now, the rise is mainly due to the growing optimizing and the weakness in the US currency this year.

In the coming weeks the Rupee may still continue to grow but its long growth at the current rate seems to not be plausible as due to the coming elections the currency rises and falls as well as the equities but the current growth may remain for some more time as it’s getting backed by a strong foreign investment. The stability in the rate of Crude oil has further strengthened the growth of the Indian currency for now.

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In case of a best scenario, the Rupee may stabilise at around 68.70 to 68.40 levels. But the sudden rise has also had many of the experts concerned as the uncertainty in currency rates cause trouble to both the importers as well as the exporters.

As of now, the industrial sector is hoping for the Rupee to stabilise at around 70 to a dollar so that the consistency may maintain again.

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