This Month Rupee becomes Asia’s worst-performing currency

The Indian rupee has now become Asia’s worst-performing currency this month. The local unit has slumped 3.49 percent…
The Indian rupee has now become Asia’s worst-performing currency this month.

The local unit has slumped 3.49 percent against the U.S. dollar so far in August. setting it up for its second-worst monthly loss in four years

As it battles pressures from China’s yuan, an unresolved global trade war and fleeing foreign funds.

A sharp drop in the rupee may wipe out most of the profits for offshore investors.

“The high-yielding rupee will likely advance further if Modi wins a second term,” said Gao Qi, a currency strategist at Scotiabank in Singapore, who expects the currency to rally to 67 per dollar by June-end. A dovish tilt by major central banks in the face of a faltering global expansion could also prompt foreigners to chase higher yields in emerging Asia, he said.

On March 18, foreign investors bought a net of $3.3 billion shares and raised holding of bonds by $1.4 billion in the month, added the report.

Besides, borrowing in dollars to purchase rupee assets has also helped in the recovery over the past one month. Another analyst said the market is expecting a Modi victory and there are no other factors to explain the sudden change in mood.

Analysts expect the rupee to remain “resilient” in the near future and a win for the BJP-led coalition will be a positive development for the rupee.

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