A potential flux of foreign inflows, along with back-to-back large share sales is likely to bring reprieve to the Indian rupee after it took a hit due to rising oil prices. An NDTV report states that the currency is touted to be 74 per dollar by the end of December, according to a Bloomberg survey.
The Indian rupee, which was the worst performer of emerging Asia over the last few months rebounded by 15 paise to close at 75.37 against the US dollar following a rally in domestic equities and weak American currency in overseas markets. In addition, lower crude prices and a benign retail inflation in September also supported the rupee sentiment, forex dealers said.
At the interbank forex market, the rupee opened strong at 75.29 against the greenback. During the session, the domestic unit swung between 75.19 and 75.51. On Tuesday, the rupee had closed at 75.52 against the dollar.
Retail inflation fell to a five-month low of 4.35 percent in September from 7.27 percent in the year-ago period as prices of vegetables and other items declined. “India’s CPI fell to a five-month low in September at 4.35 percent, well within RBI’s comfort zone of 2- 6 percent, providing RBI scope to continue with its accommodative policy stance to achieve sustainably.
NDTV claims that as Warren Buffet’s Paytm gears up to raise about $10billion in initial share sales, more inflows will happen in Indian digital companies.
So far, RBI’s soft interventions to resist currency losses have not gone down well with traders. According to an NDTV report, “The rupee has declined by 3% since early September, and India Forex Advisors Pvt. says the RBI may have allowed losses intending to correct the rupee’s overvaluation.”
“The rupee has come under pressure as surging commodity prices rekindled worries about inflation and the financial health of the net oil-importing nation. A stronger dollar, spurred by rising wagers of U.S. stimulus taper, has also weighed on emerging-market currencies,” the report states.
With inputs from wires