The Indian Rupee has made a third monthly loss after the Indian Central Bank signalled that its measures to support the flagging currency are only a temporary measure. As a result bonds and stocks tumbled.
The Rupee has declined by almost 40% in the past two years
According to investors, the Reserve Bank of India’s recent comments has caused confusion in the markets. The Bank maintained its benchmark rate at 7.25% on Tuesday saying that its actions in July, which were designed to support the Rupee by creating a cash squeeze, will be reversed as soon as the exchange rate stabilises.
Credit Agricole CIB warned that the RBI’s actions may end up harming the Indian economy, create more weakness in the currency and trigger a vicious circle.
“The market went into Tuesday’s meeting expecting the RBI to sound hawkish, and instead the tone was relatively dovish,” Nizam Idris, head of fixed income and currency strategy at Macquarie Bank Ltd. said in a phone interview with Bloomberg on July 31st. “It would seem odd if the RBI again reverts and imposes more Rupee-support steps, so it seems to be left with no choice but to let the market decide a stable level.”
Reserve Bank of India (RBI) Governor Duvvuri Subbarao yesterday said the country is caught in a classic ‘impossible trinity’ trilemma involving the currency, economic growth and inflation.
“India is currently caught in a classic ‘impossible trinity’ trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns,” Subbarao said, adding that, had the currency been stable, the growth and inflation balance would have allowed for sticking with a monetary easing stance.
Current Rupee (INR) Exchange Rates
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 92.1501
The Euro/Indian Rupee Exchange Rate is currently in the region of: 80.4930
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.7720
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 54.5307
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 48.3759
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.0294
(Correct as of 11:05 am GMT)
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