The Indian Rupee hit a one-month high against the US Dollar on Monday after investors reduced their bets that the Federal Reserve will reduce its monetary easing programme this month, the currency’s gains however are likely to be capped by the release of inflation data which highlighted the weakness in the Indian economy.
Hopes that the Federal Reserve will choose to sustain its easing policy helped the Rupee as the programme has helped boost emerging markets since its inception. The talk of a reduction and other geo-political concerns saw the Rupee tumble to multiple record lows last month.
On Monday the Rupee found support after Larry Summers withdrew from the race to become the next Federal Reserve chairman. Summers was seen as the man most likely to have removed the Fed’s stimulus faster than the other two candidates, a move that would have weighed heavily upon emerging market currencies.
Also benefitting demand for emerging market currencies was the increase in demand for riskier assets as concern over possible military action in Syria waned in the wake of a deal being agreed between the US, Russia and Syria that the country would hand over its stockpile of chemical weapons to the international community by the middle of next year.
Holding the Rupee from making further gains was the release of the latest inflation data for the country. Inflation in the country accelerated to a six-month high in August, taking investor by surprise and was a result of the severely weakened Rupee hiking import costs. The data now puts pressure upon the Bank of India’s new governor Raghuram Rajan to maintain his efforts to support the currency.
Despite the rally some traders are warning that Monday’s gains were a knee-jerk reaction and that the markets would soon begin focusing on domestic fundamentals soon and would cause mixed trading before Friday’s Central Bank monetary policy decision on Friday.
Current Rupee (INR) Exchange Rates:
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 99.9333 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 83.7840 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 62.6707 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.6848 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 51.4548 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 60.9339 <
(Correct as of 10:40am GMT)
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