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Global index inclusion inflows help Indian Rupee buck EM currency losses

India's currency is likely to appreciate to 81 per dollar by end-December from around 82.9 on Tuesday, according to Credit Agricole SA and TD Securities

India’s currency is likely to appreciate to 81 per dollar by end-December from around 82.9 on Tuesday.  Photographer: Dhiraj Singh/Bloomberg

India’s currency is likely to appreciate to 81 per dollar by end-December from around 82.9 on Tuesday. Photographer: Dhiraj Singh/Bloomberg

Bloomberg

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By Ronojoy Mazumdar


The Indian rupee outperformed all its emerging market peers in the first two months of the year, setting the stage for a strong 2024 as the nation’s inclusion in global bond indexes spur inflows. 
The rupee was broadly steady versus the dollar in the past two months, making it the sole developing-nation currency to avoid a decline as the greenback charged ahead during that period. The advance came as global funds pumped almost $5 billion into Indian bonds to position for the nation’s inclusion in global indexes in the coming months. 

India’s currency is likely to appreciate to 81 per dollar by end-December from around 82.9 on Tuesday, according to Credit Agricole SA and TD Securities. The rupee is among the least volatile emerging-market currencies this year, with traders speculating that the central bank may have dipped into its $619 billion foreign-exchange reserve stockpile to limit the swings.
 

 


“Overall, we will likely see a mild appreciation of the rupee with volatility still remaining quite low,” said Prashant Singh, senior portfolio manager for emerging-markets debt at Neuberger Berman in Singapore. “Some near-term rupee outperformance might be seen on the back of index-related flows.”

The median analyst forecast is for the rupee to appreciate to 82 per dollar by year-end, according to data compiled by Bloomberg. 


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First Published: Mar 06 2024 | 7:36 AM IST

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