Rupee inched up by 1
paise to 65.27 against the US Dollar in Tuesday's trade amid hopes
that the US Federeal Reserve (Fed) would find it difficult to hike
interest rate at least in 2015, following a less-than-expected jobs
data released last week.
Continuing
the rally for the sixth straight session, theThe
domestic currency had settled at 65.28 on Monday. This was the
highest close for the local unit since August 19.
With
the chances of a rate hike by the US Fed moving down, emerging market
(EM) currencies, including the rupee, are going to trade firm. While
Indian exports continue to falter, the Reserve Bank of India's (RBI)
recent move to allow higher foreign portfolio investment (FPI) in
government bonds and frontload rate cut should increase foreign
interest in India and drive foreign institutional investments,It is
worth noting that trade balance and current balance are typically
much better for the second half of the year and this should support
the currency. While the rupee has outperformed most other emerging
market currencies, Ind-Ra expects the trend to continue.
The
rupee will continue to outperform its emerging markets peers as it
has since the low of August 2013.Meanwhile, the dollar index, which
tracks dollar movement against a basket of six major world
currencies, stood at 96.10.
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