Our Indian currency is holding quiet well even after the expectation that Federal Reserve might wind up its asset purchase program and possibility of rate hike indication.
With Federal Reserve still maintaining its accommodative stance by keeping interest rate steady for the year, Rupee rebounded from a five week low to 60.80. Higher yields of bond at 8.45% has attracted a lot of foreign funds and with Quantitative Easing of European Central Bank a lot of investment can be expected to flow in emerging markets like India.
In last two trading sessions rupee depreciated to 61.50 mainly on month end oil import demand but soon INR may retreat to 60.80 to 61.0 as fundamentally the economy is better placed.
Alongside the dovish outlook of US and Europe, strong fundamentals at home also support rupee. Wholesale price Index eased at 3.74% which is slowest since 2009, Trade deficit also shrank to $10.8 billion dollar due to falling crude prices and reduction in imports. Low exports and fall in Industrial Production are major setbacks for Indian economy but in long run with the efforts of Government and RBI we may see favorable changes.
RBI with keeping Focus on building dollar reserves almost making a record at $318 Billion is better prepared for interest rate hike in US next year. Forecasts of major agencies have also changed now. Rupee is expected to remain strong at the end of 2015 and remain near the level of 62/dollar.
In near time we may see appreciation in rupee but may also witness depreciation spikes due to positive U.S. economic data.