NEW DELHI, Feb 7: A ‘resilient’ Indian rupee has weathered the post-US election headwinds fairly well but the domestic currency may still break above its 66.2-68.7 range established since early 2016, says a DBS report.
Currencies of high growth economies – PHP (Philippine Peso), IDR (Indonesian Rupiah), VND (Vietnamese Dong) and INR (Indian Rupee) – were notably resilient when DXY (US Dollar Index) rallied strongly in November-December 2016.
The DXY is an index of the value of the US dollar relative to a basket of foreign currencies.
On one hand, the INR weathered global risks such as the CNY (Chinese Yuan) devaluation, Brexit and Trump’s victory at the US presidential election, and on the other hand it also proved resilient to the redemption of Foreign Currency Non-Resident (Bank) or FCNR (B) deposits and demonetisation of 500 and 1,000 rupee notes.
The report however noted that there is “little room for complacency” and “USD/INR could still break above its 66.2-68.7 range established since early 2016”.
DBS further said the INR was one of two Asian currencies that did not appreciate in January and the demonetisation move is likely to push growth below 7 per cent for three straight quarters into the second quarter of 2017.
Moreover, “higher oil prices and tax reforms could eventually lead to higher inflation and larger trade deficits at a time when the Fed is set to move from single to multiple rate hikes this year,” it added.
The rupee is currently hovering around 67.35/USD. (PTI)