Dubai: The Indian rupee fell on Wednesday, continuing from its previous day’s 2 per cent fall, and analysts point out that the Indian currency may still head lower looking at news events ahead.
The Indian rupee rose 0.21 per cent against the US dollar at 72.0188. The currency shed more than 2 per cent on Tuesday after the Reserve Bank of India governor Urjit Patel resigned, indicating a growing rift between the federal government and the central bank.
“The departure of Patel from the RBI has not only heightened investor uncertainty over India, but more worryingly will probably encourage the return of speculation of potential political influence over central bank policy in India. With Patel’s sudden exit eroding investor confidence as India prepares for a general election next year, I would expect the rupee to continue its tumble on this shocking development for a while yet,” Lukman Otunuga, Research Analyst at FXTM said.
“Various factors including mixed outcomes from exit polls and weak global data amid rising tensions between the US and China will determine the outlook for the Rupee movements in the coming months,” Adeeb Ahamed, MD, LuLu Financial Group, told Gulf News.
“Looking ahead, the Indian Rupee is expected to remain volatile on account of the upcoming Lok Sabha [lower house of Parliament] elections in 2019. We feel that Indian Rupee could move further up the 73-mark against the US dollar, based on the results of the polls,” Ahamed said.
Indian general elections are due in May next year.
The Indian currency, which has been the worst performing currency in Asia in the year so far, has shed 12 per cent of its value. The Indian currency is still 3 per cent away from its record low of 74.4825 against the dollar.