Assisted by dollar inflows, the weakest performing Asian currency soared to a eleven week high, falling under the 50 level for the first time since mid - November.
Tuesday marked the ninth consecutive day the rupee ascended against its U.S. counterpart. After sliding 16% last year, the rupee has appreciated more than 7.0% so far this year, fuelled by India opening its doors for foreign investment.
The rise in demand for Indian assets had the rupee post its longest winning streak since April, rising for the fourth consecutive week.
A move by India’s central bank to cut the minimum cash reserve requirement for banks to increase liquidity and boost economic growth along with an increase in risk appetite also supported the rally.
Rumours about the Reserve Bank of India intermittently intervening in the forex market to lift the rupee from record low also circulated the market early on in the week.
A weaker than expected growth in the last quarter of the world’s largest economy also had investors shed dollars for riskier currencies late in the week.
With inflation edging lower, the rupee continues to attract demand on hopes that India’s central bank will loosen its monetary policy to strengthen its economy.
Courtesy: CPM Group for DGCX
