The Indian Rupee came close to a one-month high against the Pound and is on course to make its strongest end to a week in 3-months as investors speculate that the nations shrinking current account deficit will increase international demand for Indian assets.
The Rupee found support after the nation’s stock market index struck a lifetime high yesterday due to a steady buying of Indian assets by foreign investors. Sentiment for the currency was boosted after data released earlier in the week showed that India’s current account deficit narrowed to its lowest level in four-years.
“Looking ahead we maintain that at least as far the first quarter of 2014 is concerned, the current account deficit is likely to remain low. Again a key reason would be lower gold imports but there is also some support from sluggish non-gold imports. Even though exports haven’t picked up much so far, the non-gold trade balance is running at about half the levels of 2012. Non-gold imports are unlikely to see a big-bounce back in Q1 2014 thanks to the still pretty weak industrial activity,” said an economist at ANZ.
According to the report released on the 5th of March the nations deficit narrowed for the fourth quarter of 2013 to $4.2 billion, or 0.9% of GDP, down from the $31.9 billion, 6.5% of GDP.
Also aiding the Rupee was the increase of sentiment for emerging market currencies which had been hit hard by the US Federal Reserve’s decision to taper its quantitative easing programme and as tensions escalated in Ukraine. As the tensions eased in the troubled region sentiment for riskier currency’s increased.
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,102.3290 ,
Euro,,Indian Rupee,84.7001,
US Dollar,,Indian Rupee,61.0300 ,
Australian Dollar,,Indian Rupee,55.6563 ,
[/table]
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