The Chinese renminbi has given a YTD return of 5.46%, the South African Rand has provided a return of 3.11% while the Indonesian rupiah’s return stands at 1.46%.
The rupee on Tuesday closed at over seven-week lows at 64.33 against the dollar led by large dollar requirement by a corporate which further led to triggering of stop-losses that accentuated the decline. The fall of the currency gathered momenturm at around two in the afternoon even as stop-losses at levels between 64.20 and 64.25 got triggered due to large buying by a corporate house, dealers said. “There was a heavy requirement of dollars by a large corporate house. On Tuesday, we saw a foreign bank along with a few state-owned banks buy dollars. Some exporters also cashed out towards the end of the day,” said a currency dealer. This is the highest one-day fall of the rupee in over five weeks with the currency having tested 64.33 on the lower side during the day. The rupee has given a year-to-date return of 5.59% which is higher than most of its emerging markets peers.
The Chinese renminbi has given a YTD return of 5.46%, the South African Rand has provided a return of 3.11% while the Indonesian rupiah’s return stands at 1.46%. The Russian Ruble has provided a return of 5.97% while the Malaysian Ringitt has given a return of 7.03%. The rupee’s appreciation this year has been supported by considerable foreign portfolio investments into Indian debt and equity to the tune of $27.19 billion. Dollar weakness has also pushed the Rupee higher prompting the Reserve Bank of India (RBI) to shore-up its forex reserves which has hit a life time high of $400.726 billion. The dollar index on Tuesday was trading at 91.936. The market is keenly watching the two-day FOMC meet that started Tuesday which is likely to give some guidance on whether the US Fed would hike the interest rate in December and whether the Fed would start its planned balance sheet normalisation soon.
If the Fed starts trimming its $4.5 trillion balance sheet soon, the market might brace for some amount of dollar strengthening along with fund outflows from the emerging markets. In this case, there might be pressure on the Rupee which might give the central bank adequate reasons to open up further investment limits in corporate bonds. So far, FPIs have almost fully utilised the investment limits available in central government securities and corporate bonds.