Indian Rupee Forecast: INR set for Best Exchange Rate Week of Year

September 13, 2013 - Written by Minesh Chaudhari

STORY LINK Indian Rupee Forecast: INR set for Best Exchange Rate Week of Year

The Indian Rupee is on track to make its biggest weekly gain since last November as optimism increased that a proposal by the new governor of India’s Central Bank will boost the supply of Dollars into the country.

Raghuram Rajan took over as head of the Central Bank earlier this month and since he took the reins the Rupee has managed to halt its rapid decline. Rajan’s vow to rein in inflation and sell concessional swaps for foreign currency lenders is set to boost India’s reserves by as much as $10 billion.

Despite the positive run this week the Rupee is finding itself on the back foot today as concerns over the country’s slow growth rate has raised concerns that foreign investors may become deterred from putting funds into the country if the US Federal Reserve decides to taper its monetary easing policy at its two day long policy meeting next week.

The amount of overseas funds in India has plummeted by $10.5 billion since May 22nd when Fed Chairman Ben Bernanke first hinted that the Central Bank was considering cutting its asset purchasing programme, the programme which had fuelled demand for emerging market currencies like the Rand.

Any reduction to the Fed’s programme is likely to have a significant impact on the Rupee but it is hoped that Rajan’s new policies will be able to deflect much of the possible damage. Most investors have come to accept that a reduction in stimulus is likely and as such the impact of a cut should be a lot less than previously when the hint of a reduction caused panic.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: American Dollar Forecasts Currency Predictions Daily Curre Forecasts