Thread by @BiIndia

#RBI kept the #Rupee ‘exceptionally’ stable so far, and the tide could turn for the better say experts

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By @jainrounak

A looming global #recession, unprecedented #inflation and a strengthening US dollar has forced central banks around the world to use their forex reserves to keep their currencies from falling. The #RBI has done an ‘exceptional’ job of keeping the rupee stable so far, experts say.

Indian markets have remained relatively strong as compared to peers like #Indonesia and #Brazil. Much of this is due to the strong buying by domestic investors even as foreign investors continued to pull out record money from India.

#RBI

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Foreign #investors have pulled out over ₹2.5 lakh crore from the Indian markets in 2022. Looking at the way things are going, this month could be the worst ever in the history of Indian markets.

#RBI

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Currencies all over the world have witnessed significant volatility in the past few months. However, if you compare the volatility in the value of #rupee with that of other leading currencies in the world, the rupee has been amongst the best performers, experts say.

#RBI

“The #RBI has been intensively intervening in the currency markets. There has been a fall in the forex reserves by almost $45 billion. The central bank has also used the reserves for crude import payments too,” Heena Naik, research analyst – currency, Angel One, told @BiIndia.

Essentially, given that India has a trade deficit – its imports are higher than exports – the value of the #rupee will continue to decline. It is the decline that needs to be managed and experts believe that the value of the rupee could remain between 76-80 per #dollar.

#RBI

Experts say that emerging markets like India have faced the brunt of errors by the central banks of developed markets like the #US. While all of them believe that better days could be ahead of us, they are awaiting the outcome of the US #Fed meeting in July.

#RBI

The 10-year yield curve in the #US has started to invert, and once that is complete, FII flows could turn positive. This will give a boost to the markets but this could take 3-4 months. Until then, the Indian markets will continue to flirt with the #bearmarket territory.

#RBI