While a weaker currency may support exports amid a nascent economic recovery from the pandemic, it also poses risk of imported inflation, and may make it difficult for the central bank to maintain interest rates at a record low for longer. Prasanna, head of global markets, sales, trading and research at ICICI Bank Ltd in Mumbai.ĭepreciation in rupee is a double-edged sword for the Reserve Bank of India. “The monetary policy divergence and widening current account gap have set depreciation in the rupee in the near term,” said B. Record-high trade deficit and the central bank’s policy divergence with the Federal Reserve have also impinged on the rupee’s carry appeal. recently lowered their outlook for equities, citing lofty valuations, at a time when concerns about the omicron virus variant are roiling the global markets. The currency declined 2.2% this quarter as global funds pulled $4 billion of capital out of the country’s stock market, the most among regional markets where data is available.įoreigners sold Indian stocks as Goldman Sachs Group Inc. The Indian rupee is set to end a tumultuous year as Asia’s worst-performing currency with foreign funds fleeing the nation’s stocks.
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