The Indian Rupee (INR) advanced by its biggest margin in a week against the US Dollar (USD) on Wednesday after concerns over accelerating inflation was tempered by an improvement in Monsoon rains.
Analysts were growing concerned that the a slow start to the June to September Monsoon season would raise the price of food goods as a lack of rain looked set to lead to a shortage of domestic food products and in turn inflate prices.
According to the Indian weather department the deficit in the amount of rainfall narrowed to 27% of the 50 year average.
The Monsoon provides 70% of India’s yearly rainfall. In the week of July 11th the deficit had been recorded at 43%.
‘A revival in Monsoon rains would be seen as a positive. The Rupee is likely to remain range-bound as the RBI seeks to keep the currency stable,’ said a currency analyst at Mumbai based Kotak Securities Ltd.
The Rupee has now advanced for a second consecutive session and was also supported by foreign capital inflows.
Global investors have put more than $4billion into India’s bonds and stocks this month after the new government led by Prime Minister Narendra Modi unveiled new plans to reduce the nation’s budget deficit.
The currency was also continuing to be supported by sales of US Dollars and the reduction in risk aversion.
Concerns over a stand-off between the West and Russia eased after investors deemed the latest sanctions announced by the European Union as soft and that they will not have a negative knock on effect upon the wider global economy.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Indian Rupee,60.0775 ,
Pound Sterling,, Indian Rupee,102.3950 ,
Euro,, Indian Rupee,80.9080 ,
Australian Dollar,, Indian Rupee,56.7950 ,
[/table]
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