It may have taken days of negotiations, but the US government finally reached an agreement to increase the nation’s debt ceiling and end the federal shutdown. While investors breathed a sigh of relief that a default had been averted, the currency market experienced notable movement – particularly among higher risk assets like the Rupee.
The US Dollar to Indian Rupee Exchange Rate was in the region of 61.2300 as of 13:20 GMT
The Indian currency strengthened against the ‘Greenback’ during the North American session and extended gains in local trade as investors bet that the recent political instability would stop the Federal Reserve tapering stimulus.
As noted by industry expert Satyajit Kanjilal the ‘Rupee’s basic weakness has been tackled [since Raghuram Rajan became RBI governor], but at the same time India’s growth forecasts have been downgraded by the International Monetary Fund and the World Bank. So that’s a concern. It is fairly certain now that the quantitative easing tapering will be delayed, fuelling the risk taking sentiment. Inflows should come to India and this should strengthen the Rupee.’
The US Dollar to Rupee (USD/INR) exchange rate hit a low of 61.2000
If the string of US reports whose release was delayed by the shutdown (like US non-farm payrolls) surprise to the upside, tapering speculation could flare again, but given how damaging the impasse has been for US growth prospects easing is unlikely to be trimmed until at least next year.
The Rupee was able to close the local session trading 62 paise higher against a broadly softening US Dollar ahead of the release of the US initial jobless claims report.
However, the emerging market asset did decline against the Pound as the British currency rallied following the publication of unexpectedly strong UK retail sales figures.
Indian economic data is thin on the ground in the days ahead so further Rupee movement will largely be the result of US developments.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 98.4272 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 83.5361 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.2300 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.8788 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 52.0135 >
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.4466 <
(Correct as of 13:20 GMT)
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