INR Falls to Lowest Since 2013

The fall in the Indian rupee to its weakest since September 2013 has left traders unruffled as they believe the country’s sturdier economy and central bank interventions will allow the currency to navigate a difficult global environment.

Earlier in the session, the rupee weakened to as much as 67.2550 to the dollar, a level last seen in September 2013, when the country suffered its worst market turmoil since the 1991 balance of payments crisis.

Although traders expect the rupee to weaken further to around 67.50 in the near-term as slumping oil prices and volatility in China’s market roil emerging market currencies, they say the currency will remain far above the record low of 68.85 hit in August 2013.

The RBI is also expected to intervene frequently, as it did on Thursday, with traders also anticipating more actions in futures markets after the central bank said in December it was open to that prospect.

“I think the RBI would generally be comfortable with the way the currency is behaving,” said Rahul Bajoria, regional economist with Barclays in Singapore.

“Inflation is under check and it will allow the RBI to let the rupee depreciate in a controlled manner, especially if the dollar continues to strengthen,” Bajoria said, adding that some depreciation in the currency would benefit exporters.

He expects the rupee to weaken to 69-70 to the dollar by the year-end.

via Economic Times India

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza