Funds Shunning India Turns Rupee Into EM Asia’s Worst Currency

[IAJ]

The Indian rupee is set to end a tumultuous year as Asia’s worst-performing emerging market currency with foreign funds fleeing the nation’s stocks.

The currency declined 1.9% this quarter as global funds pulled $4.2 billion of capital out of the country’s stock market, the most among regional markets where data is available.

Foreigners sold Indian stocks as Goldman Sachs Group Inc. and Nomura Holdings Inc. recently lowered their outlook for equities, citing lofty valuations, at a time when concerns about the omicron virus variant are roiling the global markets. Record-high trade deficit and the central bank’s policy divergence with the Federal Reserve have also impinged on the rupee’s carry appeal.

“The monetary policy divergence and widening current account gap have set depreciation in the rupee in the near term,” said B. Prasanna, head of global markets, sales, trading and research at ICICI Bank Ltd in Mumbai.

Depreciation in rupee is a double-edged sword for the Reserve Bank of India. While a weaker currency may support exports amid a nascent economic recovery from the pandemic, it also poses risk of imported inflation, and may make it difficult for the central bank to maintain interest rates at a record low for longer.

QuantArt Market Solutions expects the rupee to decline to 78 per dollar by end-March, falling past the previous record low of 76.9088 reached in April 2020, while a Bloomberg survey of traders and analysts forecast the rupee at 76.50. The rupee is set to drop about 4% this year in a fourth straight year of losses.

Stocks on The Edge

Foreign exodus from stocks have led to the benchmark S&P BSE Sensex Index falling by about 10% below an all-time high touched in October. Despite that, the one-year forward price-to-earnings ratio for the Sensex is near 21, compared to 12 for MSCI’s Emerging Markets Index, meaning there’s room for the equities to fall even further. Bonds have seen $587 million of outflows this quarter.

Bearish rupee calls are rising as India’s trade deficit widened to an all-time high of about $23 billion in November amid higher imports. The ample liquidity in the banking system, partly created by the RBI’s dollar purchases, may make it difficult for the central bank to intervene to the same extent in 2022 to curb rupee’s losses, according to Goldman Sachs.

Still, not all are pessimistic. A likely reversal in foreign inflows in the coming quarter on account of share sales in companies including Life Insurance Corp. of India, billed as India’s biggest initial public offer, may cushion the rupee, according to UBS AG.

The rupee gained 0.4% on Tuesday to 75.63 per dollar, helping pare the recent declines.

Beyond the temporary spike in dollar/rupee expected in the next four-to-six weeks, “we see the one-off flows and supportive 1Q current-account seasonality to come at play,” said Rohit Arora, emerging market Asia strategist at UBS. “As long as oil remains tamed, rupee should end the fiscal year below current levels possibly in 74-75 range.”

https://www.bloomberg.com/news/arti...ng-india-turns-rupee-into-worst-asia-currency

 

[street cricketer]

How does this work.. Didn't Pakistani rupee get devaluated by a bigger margin during the last year?

Can someone with economics background explain..

 

[IAJ]

How does this work.. Didn't Pakistani rupee get devaluated by a bigger margin during the last year?

Can someone with economics background explain..

This article is about Emerging Markets. Maybe Paksitan isn't even in that category?

 

[street cricketer]

This article is about Emerging Markets. Maybe Paksitan isn't even in that category?

Yeah that might be it I think. I didn't notice the emerging market part.

 

[Varun]

The Indian Rupee has been remarkably stable in the 72-75 range for a number of years.

Although now it has broken past 76 due to the recent bout of selling.

 

[JaDed]

Its surprisingly been the most stable in recent years.. guess different criteria

 

[Napa]

The Indian rupee is set to end a tumultuous year as Asia’s worst-performing emerging market currency with foreign funds fleeing the nation’s stocks.

The currency declined 1.9% this quarter as global funds pulled $4.2 billion of capital out of the country’s stock market, the most among regional markets where data is available.

Foreigners sold Indian stocks as Goldman Sachs Group Inc. and Nomura Holdings Inc. recently lowered their outlook for equities, citing lofty valuations, at a time when concerns about the omicron virus variant are roiling the global markets. Record-high trade deficit and the central bank’s policy divergence with the Federal Reserve have also impinged on the rupee’s carry appeal.

“The monetary policy divergence and widening current account gap have set depreciation in the rupee in the near term,” said B. Prasanna, head of global markets, sales, trading and research at ICICI Bank Ltd in Mumbai.

Depreciation in rupee is a double-edged sword for the Reserve Bank of India. While a weaker currency may support exports amid a nascent economic recovery from the pandemic, it also poses risk of imported inflation, and may make it difficult for the central bank to maintain interest rates at a record low for longer.

QuantArt Market Solutions expects the rupee to decline to 78 per dollar by end-March, falling past the previous record low of 76.9088 reached in April 2020, while a Bloomberg survey of traders and analysts forecast the rupee at 76.50. The rupee is set to drop about 4% this year in a fourth straight year of losses.

Stocks on The Edge

<b>Foreign exodus from stocks have led to the benchmark S&P BSE Sensex Index falling by about 10% below an all-time high touched in October.</b> Despite that, the one-year forward price-to-earnings ratio for the Sensex is near 21, compared to 12 for MSCI’s Emerging Markets Index, meaning there’s room for the equities to fall even further. Bonds have seen $587 million of outflows this quarter.

Bearish rupee calls are rising as India’s trade deficit widened to an all-time high of about $23 billion in November amid higher imports. The ample liquidity in the banking system, partly created by the RBI’s dollar purchases, may make it difficult for the central bank to intervene to the same extent in 2022 to curb rupee’s losses, according to Goldman Sachs.

Still, not all are pessimistic. A likely reversal in foreign inflows in the coming quarter on account of share sales in companies including Life Insurance Corp. of India, billed as India’s biggest initial public offer, may cushion the rupee, according to UBS AG.

The rupee gained 0.4% on Tuesday to 75.63 per dollar, helping pare the recent declines.

Beyond the temporary spike in dollar/rupee expected in the next four-to-six weeks, “we see the one-off flows and supportive 1Q current-account seasonality to come at play,” said Rohit Arora, emerging market Asia strategist at UBS. “As long as oil remains tamed, rupee should end the fiscal year below current levels possibly in 74-75 range.”

https://www.bloomberg.com/news/arti...ng-india-turns-rupee-into-worst-asia-currency

Another article that gives a wrong impression. BSE Index has fallen by 10% from its high, so what?

The authors start by looking at the performance of the rupee over the entire year. Why don't they do the same for stocks?

They don't because they want to publish only negative news. The stock market over the year has actually done very well, rising from around 48K to 57K, a gain of about 20% for the year.

 

[MenInG]

Another article that gives a wrong impression. BSE Index has fallen by 10% from its high, so what?

The authors start by looking at the performance of the rupee over the entire year. Why don't they do the same for stocks?

They don't because they want to publish only negative news. The stock market over the year has actually done very well, rising from around 48K to 57K, a gain of about 20% for the year.

View attachment 113814

You should write to BBG and ask them - Maybe you can teach them a few things.

 

[Napa]

You should write to BBG and ask them - Maybe you can teach them a few things.

Before I write to Bloomberg, I would like to think what you think of the authors writing stuff like

The Indian rupee is set to end a tumultuous year as Asia’s worst-performing emerging market currency with foreign funds fleeing the nation’s stocks.

The currency declined 1.9% this quarter as global funds pulled $4.2 billion of capital out of the country’s stock market, the most among regional markets where data is available.

...

Foreign exodus from stocks have led to the benchmark S&P BSE Sensex Index falling by about 10% below an all-time high touched in October.

while ignoring the positive news that the BSE Index ends the year up 20%?

 

[MenInG]

Before I write to Bloomberg, I would like to think what you think of the authors writing stuff like



while ignoring the positive news that the BSE Index ends the year up 20%?

The authors are putting forward what they feel is important. Like I said, you are free to write to them and question their judgement.

 

[Lego20]

US dollar index is up 96 now against major currencies. Given that, Indian rupee has done well.

I expect downward pressure on INR after India's decision to trade with Russia in INR to circumvent CAATSA. Uncle Sam will react.

 

[NishanKonar]

The BJP govt always tries to use fake news and propaganda to portray a rosy picture

In this case they are at the receiving end of a fake news item. This piece makes no sense. India's FDI inflows is at record levels i 2021. Stock market is also on the upward trend. The GDP is also back to 2019 levels after the big de-growth due to Covid in 2020

The Rupee depreciation in the last few months is due to spike in oil prices - which is on expected lines. With oil prices declining the rupee will revert back to 74-75

So yes this article does not make sense. But given how much fake news the BJP does all the time - they cannot complain here

 

[Rajdeep]

The BJP govt always tries to use fake news and propaganda to portray a rosy picture

In this case they are at the receiving end of a fake news item. This piece makes no sense. India's FDI inflows is at record levels i 2021. Stock market is also on the upward trend. The GDP is also back to 2019 levels after the big de-growth due to Covid in 2020

The Rupee depreciation in the last few months is due to spike in oil prices - which is on expected lines. With oil prices declining the rupee will revert back to 74-75

So yes this article does not make sense. But given how much fake news the BJP does all the time - they cannot complain here

There has been no fake news from BJP at all unless ofcourse you believe in NDTV studios or follow Zoobear in AltNews. This govt is as transparent as it gets. You dont win 2 landslide elections in India by spreading fake news. Yeh Public hai jo sab jaanti hai.

 

[cricketjoshila]

The authors are putting forward what they feel is important. Like I said, you are free to write to them and question their judgement.

Or we can just read what they have written in recent past and get an idea what kind of articles they usually write.

 

[MenInG]

Or we can just read what they have written in recent past and get an idea what kind of articles they usually write.

Seems to be a trend here - so after BBC, Guardian etc now its the turn of BBG to be pushed away as a bad source?

 

[MP2011]

Lol, hard work vs Harvard! Value of Rupee greater than MMS's age!

Clowns are ruling us and devotees are rejoicing.

 

[MP2011]

Seems to be a trend here - so after BBC, Guardian etc now its the turn of BBG to be pushed away as a bad source?

How dare anyone say anything remotely negative about their messiah?

 

[cricketjoshila]

Seems to be a trend here - so after BBC, Guardian etc now its the turn of BBG to be pushed away as a bad source?

Not BBG but the opinion of particular writers. We have Moody and S and P which believe India's sovereign ratings are stable and investment grade. IMF retains a high growth forecast for India.

Indian stocks after rising 31 Percent this year have corrected as have many markets around the world due to Omicron and oil prices.But the writers particularly focused on the correction while ignoring the 20 per cent plus returns.

If one is giving financial or economic predictions one must give the full facts and not half truths to push a narrative.

As i type, the usd to inr rates have fallen to 75 zone again. INR has been very stable in last few years and has traded within the 72-75 range.

Most brokerages have a positive or neutral outlook on Indian stocks, here we have a very negative article that focuses only on the negative part.

 

[Lego20]

Seems to be a trend here - so after BBC, Guardian etc now its the turn of BBG to be pushed away as a bad source?

There is no authentic, neutral news outlet left around the world. Sad fact.

 

[Rajdeep]

There is no authentic, neutral news outlet left around the world. Sad fact.

Why blaming news outlets only? There is a share of bias among everyone...its a human trait. People who are supporting Bloomberg here blindly bcoz the article is against India will take an immidiate u-turn or atleast will get defensive the moment it says against the party/country they support.

Bottomline is - We all are bias and there is nothing called neutral.

 

[MP2011]

The BJP govt always tries to use fake news and propaganda to portray a rosy picture

In this case they are at the receiving end of a fake news item. This piece makes no sense. India's FDI inflows is at record levels i 2021. Stock market is also on the upward trend. The GDP is also back to 2019 levels after the big de-growth due to Covid in 2020

The Rupee depreciation in the last few months is due to spike in oil prices - which is on expected lines. With oil prices declining the rupee will revert back to 74-75

So yes this article does not make sense. But given how much fake news the BJP does all the time - they cannot complain here

Sanghis used to say before 2014 that when they come to power, INR 1 will be equal to US$ 1. And devotees blindly believed them!

What price we all have been paying for their illiteracy!

 

[Napa]

The authors are putting forward what they feel is important. Like I said, you are free to write to them and question their judgement.

Fair enough. I will send them a link to the following article:

India Is on a Tear

... exciting things happen in India, but a little patience is required. In recent years, however, it seems events have sped up in the Asian subcontinent, and that's fueling a stock market rally.

Government reforms initiated a few years ago have finally started to pay off. The changes, plus a rebound in economic activity, have lifted India's stocks.

The MSCI India Index, which tracks mostly large companies, climbed 32.6% over the past 12 months, its best showing in four years and well ahead of the 0.9% rise in the developing country-stock index, MSCI Emerging Markets. Indian small-company stocks gained even more: 53.5% (returns are through Dec. 3).

The rally is far from over, say analysts and fund managers who invest in the country. Volatility is to be expected, of course; the new COVID-19 variant, for instance, is a risk. But many short- and long-term factors could propel growth in India for years to come. We'll explain the key drivers and point you toward good funds that offer the best exposure.

Interest rates have been falling, thanks in part to cuts geared to stimulate the pandemic-stricken economy. Short-term lending rates, currently 3.8%, are down from more than 8% in 2012. That has led to a burst of economic activity.

https://finance.yahoo.com/news/india-tear-224741712.html

 

[JaDed]

The BJP govt always tries to use fake news and propaganda to portray a rosy picture

In this case they are at the receiving end of a fake news item. This piece makes no sense. India's FDI inflows is at record levels i 2021. Stock market is also on the upward trend. The GDP is also back to 2019 levels after the big de-growth due to Covid in 2020

The Rupee depreciation in the last few months is due to spike in oil prices - which is on expected lines. With oil prices declining the rupee will revert back to 74-75

So yes this article does not make sense. But given how much fake news the BJP does all the time - they cannot complain here

While you are defn right but the fake news of BJP is mostly propagated towards semi-illiterates in smaller towns, now people who dislike BJP or are neutral and can read this would seem like a silly attempt at picking on BJP-India and imo backfire and make the dislikers are neutrals doubt the agenda.

It basically backfires and is stupid imho.

 

[Lego20]

Why blaming news outlets only? There is a share of bias among everyone...its a human trait. People who are supporting Bloomberg here blindly bcoz the article is against India will take an immidiate u-turn or atleast will get defensive the moment it says against the party/country they support.

Bottomline is - We all are bias and there is nothing called neutral.

I can talk about me - its not a bias when you are experiencing things first hand and have seen wide data points. Also just look at the trend of articles from these sources - the agenda is quite obvious.

India doing bad economically (or INR collapsing) would be seen and heard first from Indian sources.

 

[NishanKonar]

While you are defn right but the fake news of BJP is mostly propagated towards semi-illiterates in smaller towns, now people who dislike BJP or are neutral and can read this would seem like a silly attempt at picking on BJP-India and imo backfire and make the dislikers are neutrals doubt the agenda.

It basically backfires and is stupid imho.

Not really. Fake news is so pervasive that even educated folks fall for it. Remember the chips in new currency notes - we had news editors discussing it. People who watch Arnab Goswami and Rahul Shivshankar are not semi literates. They are mostly upper middle classes. Indian voters are gullible.

Point is its now no hold barred. And for a change the BJP is at the receiving end of fake news. In Bengal elections so much fake news about BJP planning to ban non veg food and bringing Hindi speaking outsiders definitely hurt their prospects

 

[NishanKonar]

Modi bhakts who follow news on Zee News , Times Now and Republic will look silly if they cry BBC , Bloomberg and Gaurdian are fake

I mean BBC , Blomberg they do peddle fake stuff at times ( this news is clear example ) but nowhere close to the non stop fake news propaganda by the like of Zee News and Republic. Bit like the boy crying wolf

 

[NishanKonar]

Sanghis used to say before 2014 that when they come to power, INR 1 will be equal to US$ 1. And devotees blindly believed them!

What price we all have been paying for their illiteracy!

Exactly. BJP has mastered the art of fake news propaganda

Now they are facing the heat. Lost badly in Bengal. Now it does not look all that rosy in coming state elections especially Uttar Pradesh

 

[Technics 1210]

Oh dear oh dear. The common man (in Billions in India) doesn’t understand the simple fact the Fed is going to rase rates, meaning Indian debt in USD is about to become expensive - hence forward thinkers are bailing on the Indian economy cos India is broke.

In before Overseas Indians, you live in USD, not INR - proof you have no faith in the Indian Rupee otherwise why flea incredible India?

Toast? With Marmite.

 

[jusarrived]

Why is this projected as such a bad thing, it's not like it's taking a nose dive . Infact I hope it gradually depreciates to 80-82 levels in next 5 years

Any one notice the salary jumps in IT past 1 year? Haven't seen anything like this in my entire career . We can't sustain this if Rupee gets stronger lol

 

[Lego20]

Oh dear oh dear. The common man (in Billions in India) doesn’t understand the simple fact the Fed is going to rase rates, meaning Indian debt in USD is about to become expensive - hence forward thinkers are bailing on the Indian economy cos India is broke.

In before Overseas Indians, you live in USD, not INR - proof you have no faith in the Indian Rupee otherwise why flea incredible India?

Toast? With Marmite.

What makes you think India will not raise rates in response? Most developing countries are already front running the Fed in raising rates.

The biggest problem India faces in terms of foreign exchange is managing balance of payment. The high ticket import bills are Oil/gas and precious metals. With inflation picking up globally, this is going to worsen weakening the INR.

 

[MP2011]

Exactly. BJP has mastered the art of fake news propaganda

Instead of INR 1 = US$ 1, what we have got is lowest INR has ever dropped vis-a-vis US$. Instead of asking tough questions they are still rejoicing in Kashi, Ayudhya and Muslims' lynching.

Their supreme leader may play havoc with their lives but they won't stop kowtowing him because apparently he keeps Muslims in check!

 

[Napa]

Oh dear oh dear. The common man (in Billions in India) doesn’t understand the simple fact the Fed is going to rase rates, meaning Indian debt in USD is about to become expensive - hence forward thinkers are bailing on the Indian economy cos India is broke.

Broke with $635 billion in the bank, up from $360 billion 5 years ago.

https://tradingeconomics.com/india/foreign-exchange-reserves

In before Overseas Indians, you live in USD, not INR - proof you have no faith in the Indian Rupee otherwise why flea incredible India?

Toast? With Marmite.

I will admit you know better and "flea" this forum the day India is really broke and goes to the IMF for a baiout.

 

[cricketjoshila]

Broke with $635 billion in the bank, up from $360 billion 5 years ago.

https://tradingeconomics.com/india/foreign-exchange-reserves



I will admit you know better and "flea" this forum the day India is really broke and goes to the IMF for a baiout.

NH has predicted doom of Indian economy since MMS was PM. While Indian economy is doing ok, meanwhile Pakistan has gone to IMF asking for bailouts, TWICE.

 

[MP2011]

Now they are facing the heat. Lost badly in Bengal. Now it does not look all that rosy in coming state elections especially Uttar Pradesh

Only if UPites had any gray matter. For heaven's sake, they gave sanghis 325 seats immediately after the biggest scam of all times demonetization happened.

What makes you think they will be intelligent enough to call the bluff of bigot and Bisht this time even after so many deaths have happened under their watch not so long ago?

 

[NishanKonar]

Only if UPites had any gray matter. For heaven's sake, they gave sanghis 325 seats immediately after the biggest scam of all times demonetization happened.

What makes you think they will be intelligent enough to call the bluff of bigot and Bisht this time even after so many deaths have happened under their watch not so long ago?

Lot of discontent against Yogi. Even the BJP guys look nervous. Opinion polls show ground slipping. Let's see what happens

 

[MP2011]

Lot of discontent against Yogi. Even the BJP guys look nervous. Opinion polls show ground slipping. Let's see what happens

I think whatever they did in Kashi a fortnight back, gave this thought wings that they indeed are nervous but once again people will vote on religious lines instead of matters which matter and in this area no one even comes close to sanghis in religiously polarizing the electorate.

 

[Technics 1210]

What makes you think India will not raise rates in response? Most developing countries are already front running the Fed in raising rates.

The biggest problem India faces in terms of foreign exchange is managing balance of payment. The high ticket import bills are Oil/gas and precious metals. With inflation picking up globally, this is going to worsen weakening the INR.

Raising rates in response will mean those in debt will have to pay more to service their debt. Consumer Credit is a relatively new concept in India.

Most of the developing economies have been battered for this very reason; USD denominated debt becomes expensive, companies go bust, interest rates rise to combat inflation and it’s a vicious downward spiral.

Still, a weaker INR is good news for Indians living abroad.

 

[Cover Drive Six]

Why is this projected as such a bad thing, it's not like it's taking a nose dive . Infact I hope it gradually depreciates to 80-82 levels in next 5 years

Any one notice the salary jumps in IT past 1 year? Haven't seen anything like this in my entire career . We can't sustain this if Rupee gets stronger lol

Lol..I got double hike and promotion.
2021 is the best year I ever seen.
Huge recruitments and paying very good. Many IT firms recruited at record level.

Pretty good year for all sectors.
I didn't expect this growth after 2019/20 covid disaster.

 

[Cover Drive Six]

Now they are facing the heat. Lost badly in Bengal.

Lost badly in Bengal ?lol
Actually BJP punched above their weight.
3 seats to 90+ is improvement. Not bad

 

[NishanKonar]

Lost badly in Bengal ?lol
Actually BJP punched above their weight.
3 seats to 90+ is improvement. Not bad

For 1 year BJP kept saying they will wiin 200 + in Bengal.

Now saying moving from 3 to 75 is huge achievement - that's just cope

Fact is BJP threw the kitchen sink in Bengal, poached politicians from TMC and CPM and still came short. Post elections - the most of the BJP leaders and cadres have deserted the party. Today only in Calcutta there are reports that 4 more BJP leaders have switched over to TMC

Fact is BJP party structure is decimated in Bengal due to large scale desertions post elections. In the recent Kolkata local elections - they came 3rd behind CPM. Even in Marwari and Gujarati dominated wards BJP fared poorly

Of course as a hardcore Modi bhakt - u wont believe all this

 

[jusarrived]

Lol..I got double hike and promotion.
2021 is the best year I ever seen.
Huge recruitments and paying very good. Many IT firms recruited at record level.

Pretty good year for all sectors.
I didn't expect this growth after 2019/20 covid disaster.

Pretty much same . Promotion and hikes more than last 5 years put together. We have given up to 100% hikes in some cases .
I think salaries will keep going up next 5-6 years, especially IT which I thought was dead two years back

 

[jusarrived]

Raising rates in response will mean those in debt will have to pay more to service their debt. Consumer Credit is a relatively new concept in India.

Most of the developing economies have been battered for this very reason; USD denominated debt becomes expensive, companies go bust, interest rates rise to combat inflation and it’s a vicious downward spiral.

Still, a weaker INR is good news for Indians living abroad.

Interest rates have been cut over 2% in last 2-3 years, so there is enough room to bump it up a little without having a major impact, infact it's pretty much expected irrespective of what fed does.
India is a developing country, a marginal weakness in currency is good for the economy, not just Indians living abroad

 

[MP2011]

For 1 year BJP kept saying they will wiin 200 + in Bengal.

Now saying moving from 3 to 75 is huge achievement - that's just cope

Fact is BJP threw the kitchen sink in Bengal, poached politicians from TMC and CPM and still came short. Post elections - the most of the BJP leaders and cadres have deserted the party. Today only in Calcutta there are reports that 4 more BJP leaders have switched over to TMC

Fact is BJP party structure is decimated in Bengal due to large scale desertions post elections. In the recent Kolkata local elections - they came 3rd behind CPM. Even in Marwari and Gujarati dominated wards BJP fared poorly

Of course as a hardcore Modi bhakt - u wont believe all this

Corruption can take you only so far. Don't think motabhai has learnt his lessons from his debacle in WB elections though.

He is still on buying spree, buying legislators whenever he is in trouble.

 

[NishanKonar]

Corruption can take you only so far. Don't think motabhai has learnt his lessons from his debacle in WB elections though.

He is still on buying spree, buying legislators whenever he is in trouble.

UP elections will be critical. If BJP lose - its the beginning of the end

 

[MenInG]

The Indian rupee hit a record low against the US dollar on Thursday as the relentless surge in global crude oil prices raised concerns about a sustained rise in imported inflation, while choppy domestic shares also hurt.

The partially convertible rupee was trading at 77.79/80 per dollar after touching a record low of 77.81. The previous low of 77.7975 was touched on May 17.

"There is possibly some bit of dollar selling by the central bank that is there, but they can only prevent day to day volatility, the direction for the rupee is clearly lower," a senior trader at a foreign bank said.

The central bank has time and again reiterated that it only intervenes to arrest extreme volatility in the currency but does not target any specific levels.

Traders said the rupee could eventually weaken towards 79/dollar levels by end of fiscal year 2022/23 but the fall could be accelerated by firm crude oil prices.

Oil prices held firm near 13-week highs on Thursday after China reported stronger-than-expected exports in May, although new Shanghai lockdown restrictions capped gains.

India imports nearly 85% of its oil requirements and high crude tends to push up domestic inflation while also widening the country's trade and current account deficits.

Indian shares extended losses to a fifth session as investors worried that aggressive policy tightening by central banks could stifle global economic growth.

RBI raised its key repo rate by 50 basis points on Wednesday.

Foreign funds have sold stocks worth more than $23 billion so far in 2022 while they are net sellers of $2.1 billion in debt.

Bearish bets on Asian currencies eased on signs that China's economic pain may abate with the relaxation of Covid-19 curbs, but analysts were still wary of future lockdowns and the direction of US monetary policy, a Reuters poll last week showed.

"Further depreciation in the rupee will be seen if levels around 77.80 start to be breached consistently. This will open targets of 78.25 for the rupee," currency analysts at Emkay Global wrote in a note.

Express Tribune

 

[MP2011]

So has feku turned 78 then?

 

[daytrader]

Indian rupee hits record low on current account deficit concerns

MUMBAI, July 5 (Reuters) - The Indian rupee hit a record low against the U.S. dollar on Tuesday as concerns of a wider current account deficit came to the forefront after the country's trade deficit hit an all-time high in June.

Data late on Monday showed India's June trade deficit widened to a record high of $25.63 billion, following a rise in crude oil and coal imports, from $9.61 billion a year earlier.

Analysts and economists are expecting the country's current account deficit to widen to around 3.2% of the GDP in fiscal year 2023 compared with 1.2% in 2022.

The partially convertible rupee closed trading at 79.37/38 per dollar, after hitting a life low of 79.3750. It had touched the previous record low of 79.12 last week and had closed trading at 78.95 on Monday.

"We expect India's widening current account deficit to remain an ongoing drag for INR, with limited offsets from India's FDI and overseas investment inflows, exacerbated by ongoing FPI outflows," Sonal Varma, economist at Nomura, said.

"Therefore, we expect USD/INR to reach 82 by Q3 2022 and 81 by Q4 2022. One risk to our view is the RBI's USD selling intervention, which could slow the pace of INR depreciation."

The domestic share market turned negative towards the end of trade to close down 0.2%, adding to the pressure on the rupee.

Foreign portfolio outflows from equities in the month of June stood at $6.6 billion, the highest since March 2020, taking the total outflows so far in 2022 to over $30 billion.

Traders said the central bank sold dollars sporadically and helped stem a steeper fall in the local unit, but expectations of aggressive rate hikes by the U.S. Federal Reserve and the resultant wider interest rate differential is expected to keep the weakening bias in the rupee.

Goldman Sachs in a recent note said given the changes in the brokerage's balance of payments forecast, they have revised their 3, 6 and 12 month forecasts on the USD/INR to 80, 81 and 81 compared with 79, 79 and 78 previously.


https://www.reuters.com/markets/rates-bonds/indian-rupee-hits-record-low-2022-07-05/

 

[MenInG]

MUMBAI:
The Indian rupee ended 2022 as the worst-performing Asian currency with a fall of 11.3%, its biggest annual decline since 2013, as the dollar rocketed on the US Federal Reserve's aggressive monetary policy stance to tame inflation.

The rupee finished the year at 82.72 to the US currency, down from 74.33 at the end of 2021, while the dollar index was headed for its biggest yearly gain since 2015.

The rupee was also a victim of a rally in oil prices sparked by the Russia-Ukraine conflict, which pushed India's current account deficit to a record high in the September quarter in absolute terms.

Heading into 2023, market participants believe the rupee would trade with an appreciation bias, finding relief from easing commodity prices and hopeful of foreign investors continuing to buy Indian equities.

"The Fed could keep rates higher for longer than anticipated and if the slowdown in developed economies turns into a prolonged recession, India's exports could be hit severely, which are two key risks for the rupee," said Raj Deepak Singh, head of derivatives research at ICICI Securities.

Most traders and analysts expect the currency to move between a tight 81.50-83.50 range in the first quarter.

Equity inflows would be a key metric to watch for the rupee for foreign investors as well, analysts said.

But considering several uncertainties heading into 2023, such as tight monetary policy conditions, likely recession in some economies and an ongoing geopolitical conflict, gauging the direction of share markets had become tough, they added.

"There's going to be a period of softness in global equities... If we get a selloff in Indian shares, I'll be less optimistic on the rupee," said Christopher Wong, FX strategist at OCBC Bank.

Even if the rupee appreciates, it could still underperform Asian peers and would not be a top pick in the emerging market complex, Wong said, expecting the South Korean won and the Thai baht to gain the most next year.

REUTERS

 

[wasim-fan]

Tried hard to make sense of article. I just couldn't. On matters of currency, there are multiple factors that impact. Indian rupee required depreciation by 7% for atleast last 10 years. It never happened to that degree. Truth is that Indian central bank never allowed the rupee to appreciate much by buying dollars at every opportunity. Now they have war chest $550 billion.

India doesn't have a weak rupee story. India has a weak job story.

 

[Major]

India's new trade policy aims to promote rupee trade

NEW DELHI, March 31 (Reuters) - India's new foreign trade policy, to be adopted from April 1, will take steps to support international trade using the rupee currency, the government said on Friday, as it looks to boost exports amid slowing global trade.

The South Asian nation is prepared to trade in rupees with nations facing a shortage of dollars so as to "disaster-proof" them and effectively boost its exports, Commerce Secretary Sunil Barthwal told a news conference in the capital, New Delhi.




on Saturday.

The measures include industry-specific targets to reach a goal of $2 trillion in exports of merchandise and services by 2030, said Santosh Kumar Sarangi, head of the directorate-general of foreign trade (DGFT).

That represents a nearly three-fold jump from expected exports of $770 billion in financial year 2022/23, he added, despite global uncertainties that make the export scenario slightly challenging.

India is also launching a new amnesty scheme for one-time settlement of defaults on export obligations, Sarangi said.

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The scheme, which aims for faster resolution of trade disputes, will run until September 2023, but will not apply to cases involving fraud investigations.

India's new policy will also automate some trade approvals and cut charges for medium-sized and small businesses to secure some government-backed benefits

https://www.reuters.com/world/india/indias-new-trade-policy-aims-promote-rupee-trade-2023-03-31/

 

[Romali_rotti]

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I am skeptical and not sure how successful this will be, atleast the current Indian government is trying, which is commendable.

 

[cricketjoshila]

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I am skeptical and not sure how successful this will be, atleast the current Indian government is trying, which is commendable.

Its not a dollar replacement. But an attempt to make INR acceptable globally.

Right now when i travel anywhere out of India i carry USD or Euro. That means i have to exchange it in India. While i can exchange usd or euro anywhere. Same with GBP and Yen.

If we reach a stage where i can exchange INR into local currency anywhere. That will be a great success.