A year on from record low, optimism abounds about Indian rupee

Aug 28 2014, 14:29 IST
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India rupee is now up 14 per cent since the all-time low. India rupee is now up 14 per cent since the all-time low.
SummaryThursday marks the one-year anniversary since the Indian rupee hit record low of 68.85.

Thursday marks the one-year anniversary since the Indian rupee hit record low of 68.85.

Contrast in sentiment from that period could not be starker - the rupee is up 14 per cent since the all-time low.

Long positions in the rupee at a near three-month high, a Reuters poll shows.

Optimism comes as current account deficit has narrowed sharply. Forex reserves are just shy of record high hit in September 2011. The Reserve Bank of India(RBI) has also earned confidence with vow to fight inflation.

Hopes that Narendra Modi government will spark economic recovery are also high. FII flows are strong, totalling nearly $20 billion so far this year into debt and shares.

But risks remain, including potential of disappointment over Modi policies.

Eventual US Fed rate hikes also seen as a future risk.

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