Indian rupee has been on a short winning streak and analysts say it may be possible due to intervention from the Reserve Bank of India.
But due to this market intervention, India’s forex reserves fell $5.14 billion (Dh18.88 billion) in the week ended October 12, the biggest fall in seven years. In the week ending October 5, India had $394.46 billion of forex reserves.
On Monday, the Indian rupee continued its winning streak for another session, closing 0.25 per cent higher at 73.55 against the dollar. The Indian currency has corrected from a record low of 74.48 struck a couple of weeks ago to 73.19 on Monday, representing 1.74 per cent rise.
Going ahead, Indian rupee woes seems to be coming to an end temporarily as analysts expect risk aversion triggered by higher rates may stall the dollar appreciation.
“We don’t expect a significant appreciation in the near-term in Indian rupee,” said Phaneendar Bhavaraju, head of forex and global market strategy at Arrow Capital DIFC. “We expect it to trade between 73-74.50 in the near term.”
The Indian rupee, which was the worst performing currency in Asia, has shed more than 15 per cent of its value in the year so far. Other emerging market currencies like Argentine peso, Turkish lira and Indonesian rupiah also took a hit.
“The pace of depreciation would slowdown in medium term. An increase of risk aversion in global markets could lead to correction in Oil prices and that will be supportive of Indian rupee,” Bhavaraju said.