The fall in the Indian rupee may get some relief from foreign investment

According to a Bloomberg survey, the currency, which has become Asia’s worst-performing currency over the past month, could rise 2% near Wednesday’s $74 a dollar by the end of December. There could be a big influx for Indian shores as digital companies, including Warren Buffett-backed Paytm, plan to raise around $10 billion in initial share sales.

Rising commodity prices have rekindled concerns about inflation and the financial health of the pure oil importing country, putting the rupee under pressure. A strengthening dollar, driven by rising bets on a reduction in US stimulus, also weighed on emerging market currencies.

“Historically, when crude was boiling, equities were sluggish, and money was not coming in, so everything turned negative for the rupee,” said Sajal Gupta, head of foreign-exchange and rates trading at Edelweiss Securities Pvt. But this time, “the slate of IPOs should substantially offset the impact of higher crude oil prices.”

Traders are puzzled by RBI’s soft intervention to contain currency losses. The rupee has declined 3% since early September, and India Forex Advisors Pvt. Says RBI may have allowed the loss with the intention of correcting the overvaluation of the rupee.

This is the reason why the RBI “has not intervened too aggressively by selling the dollar,” said Abhishek Goenka, CEO of Indian Forex Advisors. Can allow. , he said.

Higher oil prices and a rapid recovery in local demand have boosted imports, pushing India’s trade deficit to an all-time high in September. Oil imports increased by almost 200 percent.

After receiving $445.8 million in the quarter ended September, India received $100 million in foreign inflows in equities so far in October, the highest in Asia, according to data compiled by Bloomberg show. In addition, Paytm, the country’s leader in digital payments, Walmart Inc-controlled Indian e-commerce giant Flipkart is also targeting an IPO in the fourth quarter.

“Especially amid vibrant IPOs, the rupee will remain supported,” said Dheeraj Nim, a forex strategist at Australia and New Zealand Banking Group Ltd. The key driver could be RBI’s policy. To maintain inflows, RBI to reduce FX purchases, as well as to manage surplus domestic liquidity.”

This story has been published without modification in text from a wire agency feed. Only the title has been changed.