As equity markets fall, the rupee is under pressure
The Indian rupee continued to weaken, falling below 82.75 against the US dollar, a decrease of 18 paise. The rise in the dollar index to above $102.50 put additional pressure on the currency as investors sold off risky assets. This resulted in major corrections in Indian benchmark indices, with around a 2.50% decline in the last two days, contributing to the rupee’s decline.
Jateen Trivedi, VP Research Analyst at LKP Securities, predicts that the Reserve Bank of India (RBI) may intervene near the 83.00 level. Important data, including US jobless claims, PMI, unemployment, and non-farm payroll, expected in the next two days, will influence the Fed’s approach and play a crucial role in determining the rupee’s movement. Trivedi suggests that the rupee’s trading range can be expected between 82.60 and 82.95.
Shantanu Bhargava, Managing Director and Head of Discretionary Investment Services at Waterfield Advisors highlights that Morgan Stanley has upgraded its views on India’s markets to overweight due to a combination of long-term structural factors and near-term strengths. India’s growth rate of 6.1% in the latest quarter exceeded market expectations, making it the fastest-growing major economy. The service sector, construction, and agriculture saw faster growth than anticipated. Additionally, India is experiencing a period of macroeconomic stability, with a better current account deficit, adequate reserves, and manageable inflation.
