The overall market trend remains broadly weak for the rupee, albeit at a slower pace compared to peers, according to Jateen Trivedi, research analyst at LKP Securities.
The fall in the rupee comes a week before inclusion of domestic bonds in the JPMorgan’s Government Bond Index-Emerging Markets. The rupee has taken comfort with over Rs 1-lakh-crore inflows in the gilts since the announcement last September.
The rupee has been a better performer because of robust investment inflows, particularly into the debt segment, and there remains an attractive yield differential, according to Kunal Sodhani, vice president at Shinhan Bank. “Also, the rupee has been still very much contained, mainly attributed to improving trade balance.”
The Reserve Bank of India’s intervention also has aided in keeping the country’s forex reserves at an all-time high. The central bank will keep selling but will allow the depreciation at a slow speed as it helps exports and reserves, according to Anil Bhansali, executive director at Finrex Treasury Advisors LLP.
Higher dollar index and US yields, falling Asian currencies, outflows due to stake sales and higher oil prices have contributed to lower rupee, Bhansali said.
