Indian rupee Asia’s worst-performing currency

Ground Report | New Delhi: Indian rupee worst-performing currency; The Indian rupee is poised to end a tumultuous year as Asia's worst-performing foreign currency flees the nation's actions.

The currency was down 2.2% this quarter as global funds pulled $ 4bn of capital out of the country's stock market, the most of the regional markets where data exists.

At a time when concerns over the omicron virus variant are hitting global markets, foreigners sold Indian stocks such as Goldman Sachs Group Inc. and Nomura Holdings Inc. lowered their outlook for stocks. The record trade deficit and the central bank's policy divergence with the Federal Reserve have affected the rupee's appeal.

Monetary policy divergence and the widening current account gap have caused the rupee to depreciate in the short term, said B. Prasanna, director of global markets, sales, trade and research at ICICI Bank Ltd in Mumbai.

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The Reserve Bank of India is a double-fronted sword when it comes to the depreciation of the pound. A weaker currency may help exports amid a nascent economic recovery from the pandemic, but it poses the risk of imported inflation, making it difficult for the central bank to keep interest rates at a record low for longer.

TantArt Market Solutions expects the rupee to fall to $ 78 by the end of March, as it fell to the recorded low of 76,9088 reached in April 2020, while a survey of brokers and analysts from Bloomberg predicted the value of the rupee in 760.50. The rupee is poised to fall 4% this year, a fourth straight year of losses.

The foreign exodus of equities has caused the S&P BSE Sensex Index to drop about 10% below an all-time high in October. The one-year price-to-earnings ratio for Sensex is nearly 21, compared to 12 for the MSCI Emerging Markets Index, so there is scope for stocks to fall even further. In this quarter, the bonds have seen outflows of 587 million dollars.

India's trade deficit widened to an all-time high of $ 23 billion in November, despite higher imports, which is why rupee calls are rising. According to Goldman Sachs, the central bank could have to intervene in 2022 due to the ample liquidity of the banking system, due to purchases of dollars by the IB.

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Some people are not pessimistic. According to UBS AG, the reversal of foreign entries in the next quarter as a result of sales rid companies such as Life Insurance Corp. of India considered the largest initial public offering in India, you can cushion the rupee.

On Monday, the rupee rose 0.2% to 75.9163 to the dollar after speculation that the central bank would intervene to cut losses on the rupee.

Rohit Arora, an emerging markets strategist at UBS, said flows and support for Q1 current account stability will come into play beyond the temporary drop in the dollar in the next four to six weeks. Oil is held in check, and the rupee should end the fiscal year below current levels, perhaps in the 74-75 range.

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