Mblaze
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Indian rupee beats emerging market currencies
MUMBAI: From being the worst performer among emerging market currencies in 2011, the rupee has outperformed all emerging market currencies in 2012.
The rupee has gained nearly 8.2% since the beginning of the year up to February 3, which is the highest appreciation compared to other Asian currency. After the rupee, the next biggest gainer has been the Brazilian lira which firmed up by 7.9% in January and the South African rand which has gained 6.6% against the dollar. All other currencies have gained less than 5%. On Tuesday, however, the local currency closed at 49.21, 15 paise lower than its previous close following dollar demand from importers.
"The initial turn in the rupee can be traced to the RBI's decision to curb speculative trading in the forwards market and to deregulate non-residents (NR) deposit rates. The measures had two effects. First by arresting the quantum of speculation the USD/ INR pair moved naturally towards its equilibrium range. At the same time, the deregulation of non-resident deposit rates helped in increasing flows that had already showed signs of picking up from August ," said a research report by HDFC Bank. After announcing the measures, the RBI followed up by intervening proactively in the forex markets so as to curb imported inflation pressures subsequently pushing the USD/INR pair lower," the report added. When research reports speak of the dollar/rupee currency pair moving lower, they mean that the rupee is getting stronger vis-a-vis the dollar.
According to Hariprasad, head of treasury at Centrum-Direct , although the rupee has firmed up in recent days there is a possibility that it may slip back to 50 levels, should there be some turmoil in Europe. "There was very good demand for the dollar when the rupee firmed up to 48.60-70 and I do not think the rupee will firm up beyond this level," he said. This was the resistance level from which the rupee slipped to an all-time low of 53.72 against the dollar on December 14, a day before RBI stepped in to ban speculative trades. He points out that RBI came in to intervene only after the rupee weakened to around the 51.5 to 52.5 levels, which is seen by some traders as the level at which RBI is comfortable with the exchange rate.
RBI's measures to curb speculation and to prop the rupee coincided with macroeconomic developments turning favour of the domestic currency. Domestic factors also changed with reports in January of improved industrial production. This was topped with an easing of policy rates by RBI which reduced the CRR by half a percentage point on January 16.
Re beats emerging mkt currencies - The Times of India
MUMBAI: From being the worst performer among emerging market currencies in 2011, the rupee has outperformed all emerging market currencies in 2012.
The rupee has gained nearly 8.2% since the beginning of the year up to February 3, which is the highest appreciation compared to other Asian currency. After the rupee, the next biggest gainer has been the Brazilian lira which firmed up by 7.9% in January and the South African rand which has gained 6.6% against the dollar. All other currencies have gained less than 5%. On Tuesday, however, the local currency closed at 49.21, 15 paise lower than its previous close following dollar demand from importers.
"The initial turn in the rupee can be traced to the RBI's decision to curb speculative trading in the forwards market and to deregulate non-residents (NR) deposit rates. The measures had two effects. First by arresting the quantum of speculation the USD/ INR pair moved naturally towards its equilibrium range. At the same time, the deregulation of non-resident deposit rates helped in increasing flows that had already showed signs of picking up from August ," said a research report by HDFC Bank. After announcing the measures, the RBI followed up by intervening proactively in the forex markets so as to curb imported inflation pressures subsequently pushing the USD/INR pair lower," the report added. When research reports speak of the dollar/rupee currency pair moving lower, they mean that the rupee is getting stronger vis-a-vis the dollar.
According to Hariprasad, head of treasury at Centrum-Direct , although the rupee has firmed up in recent days there is a possibility that it may slip back to 50 levels, should there be some turmoil in Europe. "There was very good demand for the dollar when the rupee firmed up to 48.60-70 and I do not think the rupee will firm up beyond this level," he said. This was the resistance level from which the rupee slipped to an all-time low of 53.72 against the dollar on December 14, a day before RBI stepped in to ban speculative trades. He points out that RBI came in to intervene only after the rupee weakened to around the 51.5 to 52.5 levels, which is seen by some traders as the level at which RBI is comfortable with the exchange rate.
RBI's measures to curb speculation and to prop the rupee coincided with macroeconomic developments turning favour of the domestic currency. Domestic factors also changed with reports in January of improved industrial production. This was topped with an easing of policy rates by RBI which reduced the CRR by half a percentage point on January 16.
Re beats emerging mkt currencies - The Times of India
