Despite worries about the Chinese economy and a rise in the dollar’s value relative to its major rivals, the rupee has recently been stable in a range of 82.30 and 83.20. The RBI kept rates constant and kept its stance of withdrawing accommodating policy intact, as was expected.
The RBI actively intervened to combat rupee’s weakness, and a decline in reserves supports the justification. According to the most recent information provided by the RBI, reserves currently stand at $594.87 billion, having lost between $8 and $10 billion during the previous three weeks.
As vegetable prices continue to rise, the inflation rate this month will be closely watched on the home front. The world’s top factors will continue to have an impact on the rupee, which has been fluctuating. The majority of them are anticipated to hold interest rates steady when major central banks release their policy pronouncements on the global stage.
The dollar experienced its longest winning streak in the previous 15 months as it closed for six consecutive weeks following safe-haven buying due to unpredictability in China and better-than-expected economic data from the US. As a result of a number of economic indicators coming in below expectations, the Chinese Yuan dropped to its lowest point in nine months.
A second unexpected rate drop in the last three months was announced by the PBoC as a result of the Chinese Yuan’s weakness. Officials are being pushed to propose further stimulus measures by the economy’s risk of deflation and record credit growth. Due to the Chinese economy’s slowdown and the dollar’s strength, most commodities also experienced selling pressure.
The euro and the pound have risen in recent weeks, but overall they have been under pressure in recent months due to crosses that have been burdened by the strengthening of the dollar and the negative economic data from both of these economies.
The ECB and the BoE will give their policy statements this month. It is anticipated that the central bank will hold interest rates steady, but weaker-than-expected economic data might weigh on both currencies.