Rupee at a four-month high, outperforms Asian currencies
rupee closed at its strongest level in four months on Friday, kicking off 2024 as an outperformer among Asia-Pacific currencies, as US dollar flows have poured in ahead of India's inclusion in global bond indices, while an optimistic view on GDP growth burnishes the country's appeal.
So far in January, the rupee has gained 0.4%, with the currency closing at 82.92/$1 on Friday, its strongest closing level since September 12, 2023, Bloomberg data showed. The rupee, which closed at 83.03/$1 on Thursday, weakened 0.6% in 2023 on a closing basis.
This month so far, the domestic currency has fared better than 11 currencies in the Asian basket amid a rebound in local equity markets.
The rupee's resilience versus the dollar comes amid a recent ratcheting up of geopolitical tensions, with the US and the UK on Thursday launching military strikes against Houthi rebels in Yemen.
All the other currencies in the basket have depreciated versus the US dollar so far this month, with the South Korean won and the Thai baht shedding 2% and more. Currency experts said that there was more room for the rupee to strengthen amid expectations of US interest rates being lowered in 2024, a phenomenon that typically boosts the appeal of emerging market currencies.
«We are expecting some amount of appreciation pressure for the rupee from fund flows and the issue is where the Reserve Bank of India will intervene.
