Ahead of this week’s highly anticipated US non-farm payrolls report – which could add to or go against the case for the Federal Reserve tapering stimulus – the Indian Rupee was able to stage a remarkable recovery against the US Dollar during the local session.
The US Dollar to Indian Rupee Exchange Rate was in the region of 67.1500 as of 11:55 GMT
Just as the Reserve Bank of India opens its doors to new Governor Raghuram Rajan the Rupee was able to avoid falling to a fresh record low, as has been its habit in recent weeks, and instead briefly strengthened to 66.8100 – a steep improvement on the 68.6000 low recorded earlier.
Industry experts believe the Rupee’s turnaround is largely the result of RBI intervention.
The US Dollar to Rupee (USD/INR) exchange rate hit a high of 68.6000
According to Anil Kumar Bhansali, Vice President of Mecklai Financial, ‘The intervention has been aggressive and the best part is it has been consistent today. Even Dollar/Rupee levels in the offshore and currency futures markets have come down sharply.’
Meanwhile, Prime Minister Manmohan Singh issued the following statement ahead of the upcoming Group of 20 gathering: ‘The Summit comes at a time when we in India have introduced several reform measures and taken steps to strengthen macro-economic stability, stabilise the Rupee and create a more investor friendly environment. At the same time, a stable and supportive external environment is also required to revive economic growth.’
Also today, India’s economic outlook received another knock as a report revealed that the nation’s services sector contracted last month for a second consecutive month.
The services PMI index, compiled by HSBC, fell from 47.9 to 47.6 in August.
Economist Leif Eskesen said of the result; ‘Service sector activity slowed further in August led by weaker new business flows, which led to a slowdown in employment growth and a decline in sentiment among service sector companies. Meanwhile, price pressures firmed as input costs rose and were passed on to final prices. The numbers we have seen so far for July and August for both the manufacturing and service sectors point to a further slowdown in GDP growth during the third quarter’.
The Rupee may be staging a rebound today, but if the expectations for this week’s US data prove accurate emerging market currencies like the Rupee could experience notable declines in the days ahead.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 104.8110 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 88.3841 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 67.1500 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.3538 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.8602 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 63.9196 <
(Correct as of 11:55 GMT)
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