USDINR Analysis and Asian Currency Trends
Ritesh Victor
Co-Founder Myforexeye Fintech Pvt Ltd; Ex Chief Treasury Officer-Trident Ltd; Ex-Mecklai; Ex-Evalueserve; CMT L3 candidate; NISM-RIA
After a hyper volatile last week, USDINR was primarily rangebound in the current holiday truncated week, with a high low range of 50 paise, trading at 86.475 to 86.98. With dollar index (DXY) cooling off and recovering Asian currencies, the Indian Rupee cooled off too.
Asian Currency Performance Analysis
Talking about Asian currencies, want to extend an analysis which I had shared on 3rd Jan, 25 and draw important lessons from it. Find enclosed a rebased chart of all Asian currencies vis-a-vis the US dollar, starting from 1st Sep, 24 till date. Have also included Euro (orange line) and GBP (aqua line) to widen the analysis. On 3rd Jan, 25, had highlighted that despite a 7.25% surge in the dollar index, with a consequent 4% - 10% weakening in Asian currencies, the Indian Rupee had declined 2.2% only. Fast forward 1.5 months to the present time and the overall picture has changed quite a bit. Rupee is not the best performing currency anymore. From 3rd Jan, 25 till date, dollar index has declined by more than 2% while Rupee (instead of recovering) has lost value by more than 1%. Quite a contradiction. In line with the declining dollar index, Asian currencies including Chinese Yuan (red line) have recovered lost value.
Indian Rupee's Current Position
The Indian Rupee now lies in the median range of percentage changes since 1st Sep, 24. Two critical learnings here: the RBI has probably intervened less aggressively than before and has let Rupee move in tandem with its Asian counterparts. This has corrected Rupee's overvaluation and will make our exports more competitive (much needed).
Future Implications for USDINR
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