India’s rupee fell, snapping the biggest four-day surge in 40 years, on concern slowing growth will deter inflows needed to reduce the current-account deficit.
The currency strengthened 6.1 percent in the four days through yesterday after Raghuram Rajan, who took charge as governor of the Reserve Bank of India on Sept. 4, announced steps to boost the supply of dollars. The relative strength index had risen to 83 before the rally, surpassing the 70 level that indicates a rupee rebound. Gross domestic product grew 4.4 percent last quarter, the slowest pace since the three months ended March 2009, official data show.
“I am still concerned about the growth outlook and the RBI has to walk hand-in-hand with the government to announce necessary reforms,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. (WBC) in Singapore. “Technicals had been poised for a rupee rebound and all that was needed was a small sprinkle of relative good news that came in the form of the governor’s speech.”
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.