DevangThakkar

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Eight Factors Driving Indian Rupee Right Now
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• Currency markets offer an exciting avenue for the
  retail traders and investors looking to explore
  various options to increase their investment
  returns. Domestic currency markets have seen a
  good interest over the years and best financial
  brokers are offering the facility to trade in
  currencies to their clients. With the global and
  domestic financial markets witnessing a massive
  run up, the Indian Rupee has also edged up in
  recent weeks. However, while Nifty has scaled up
  nearly 40 from its four year low in March 2020,
  the gains in INR are modest. Let us summarize a
  few key points which are affecting the
  performance of currency markets and understand
  why they matter for Indian investors.

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Coronavirus or Covid-19

• The spread of the COVID-19 pandemic and economic
  disruptions that ensued have been a major factor
  that dragged the Indian rupee to doldrums. The
  currency had witnessed a slide of more than 8
  since January 2020, approaching Rs 77 against the
  dollar, for the first time on record in April.
  Rupee fell deep alongside its other emerging
  market currencies in the last few months due to
  COVID-19 lockdown slowdown in economic
  activities. With the daily Covid-19 cases count
  hitting fresh highs every day, the overall
  movement for the INR will likely be muted.

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State of Equity Markets

• The prospects of a global recession on
  coronavirus saw foreign investors rowing out of
  the Indian capital markets bruising the Indian
  currency. Indian equities crashed over 38,
  year-to date, in March, when the lock down began,
  witnessing one of the fastest crashes in stock
  market history. Investors fretted over the impact
  of the rapidly spreading pandemic as the IMF
  predicted global contraction on par with the
  Great Depression of the 1930s. However, after the
  sharp plunge, a post-March rally pushed up the
  equities higher impressively. Indias benchmark
  Sensex has rallied, trimming the overall impact
  in July to around 10 from the 38 plunge. This
  sharp rebound in local equities also dominated
  local currency markets, supporting the Indian
  Rupee. 

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Economic Downgrades

• Downgrades by major rating agencies and lower
  growth projections by the IMF and World Bank
  citing risks from sustained low growth of the
  Indian economy as compared to the potential and
  concerns over debt affordability is seen limiting
  gains in the Indian currency over the medium
  term. The best currency brokers offer periodic
  assessment regarding the economic outlook and its
  impact on currencies.

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Conclusion

• The Indian rupee has edged up from the starkly
  low levels seen in April in line with other
  emerging market currencies which have also
  recovered from their record low levels. The risk
  appetite among investors is seen improving by a
  surge in local equities but has kept the rupee
  far from appreciating significantly given the
  broad uncertainty owing to Covid-19 spread.
  Despite a slew of negative events and news on the
  global front, rupee has maintained a narrow band.
  Nevertheless, encouraging forex reserves,
  improving equities, lower global oil prices and
  current account surplus are likely to be
  supportive for the INR.

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Thank You

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  -factors-driving-indian-rupee-right-now