The Rupee broke a three session losing streak and trades at 60.21 on strong Asian stocks. The European Central Bank and the Bank of England left rates untouched, but issued forward guidance statements on keeping rates low. This boosted an emerging market recovery as investors will have to look for yield. The INR was further influenced by merger and acquisition inflows.
The Reserve Bank of India Governor Duvvuri Subbarao made some comments regarding the currency after the CB board meeting. He stuck to reiterating the RBI’s mandate of price stability, growth and financial stability. Regarding INR volatility he denied having a price target as well as a band. His lack of defence of the currency weakened as investors sold it despite trading near record lows.
The market will be watching for the US Non Farm Payrolls report release on Friday. The forecast figure is around 160k new jobs added to the US economy. If the final print beats expectations further INR weakness is expected as the Fed has signalled a recovery in employment will trigger QE tapering.