The Indian Rupee dropped from its best rate in 8-months against the US Dollar and went into retreat against many other peers as a technical indicator suggested that the currency’s recent strong run was overdone.
Investors meanwhile were weighing upon the Rupee as they embarked on a bout of profit taking ahead of Friday’s eagerly anticipated non-farm payrolls data out of the USA. Speculation that the Reserve Bank of India will slow gains, in turn hurting exports also weighed.
“The RBI comments indicate that they don’t mind intervening in the foreign-exchange market if the rupee appreciates further,” said Vikas Babu, a Mumbai-based currency trader at Andhra Bank. “There is some profit-booking in the Rupee ahead of U.S. payrolls data, which is also weighing on the currency.”
The Rupee is forecast to reverse its course from its recent strong running later in the year as the positive sentiment ahead of the Indian general election fades and as India’s economic growth remains slow.
The currency is likely to remain trading around the 60 mark against the US Dollar and could soften to 62.
“The kind of (Rupee) appreciation we are seeing today is more because of foreign institutional investment flows which are fairly gung-ho because of elections and what they perceive would be a strong, favourable government inclined towards economic growth,” said Madan Sabnavis, chief economist at CARE Ratings. “Right up until the time when the election results come out, things will remain positive. Then, I think we will probably get back to reality and see what kind of a government comes.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee,100.0260 ,
Euro,,Indian Rupee,82.9264 ,
US Dollar,,Indian Rupee,60.2300 ,
Australian Dollar,,Indian Rupee,55.4803 ,
[/table]
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