According to experts, in 2021-22, the rupee can average from 73.50 to 74. The reason for this is that despite the vaccine, there are apprehensions about the corona virus,
Rupee strengthened by 4 percent in the current financial year
The rupee has strengthened more than 4 percent against the US dollar so far in the current financial year. Despite the challenges on the economic front with the continued flow of foreign capital and the policies brought by the RBI, the 2020-21 Indian year has been ensured for the Indian currency. According to experts, in 2021-22, the rupee can average from 73.50 to 74. The reason for this is that despite the vaccine, there are apprehensions about the corona virus and its effect can be seen on the foreign exchange market.
The financial year 2020-21 was a volatile year for the rupee. Due to the widespread selling in the equity market, the rupee had gone up to 76.90 at one time. However, with the introduction of the vaccine, expectations loomed, lockdown restrictions were relaxed, stimulus measures by governments and central banks across the world created a confidence in investors and the rupee hit a level of 72.
Benefits of RBI policies
HDFC Securities Deputy Head (Retail Research) Devesh Advocate said, despite challenges on the economic front and the fiscal deficit being higher, government securities’ returns this year were lower and foreign exchange reserves were notable due to the thought-provoking policies of RBI Increased in form.
He said that despite higher interest rate and inflation against the US, the rupee strengthened 4 percent against the US dollar in 2020-21.
According to experts, a strong year has been ensured for the Indian currency due to the continuous flow of capital in the listed shares of the country.
Foreign investors invested $ 35.22 billion in the current financial year. This is the highest since 2014-15. India attracted $ 67.54 billion of foreign direct investment in the first nine months of 2020-21, the highest ever.
Rupee fluctuations
Shri Ram Iyer, Senior Research Analyst, Reliance Securities, said the rupee fluctuation is not surprising as the Reserve Bank has given necessary support to the rupee through monetary policy and necessary intervention in the foreign exchange market.
He said that apart from this, the rupee was also supported by continuous capital inflows into the domestic stock market.
Experts say that in India and other countries of the world, increasing cases of COVID-19 is a major concern for the rupee. But with this, the trend of rupee will be determined by the situation arising out of ‘Tapper Tantrum’ (in 2013, the US Federal Reserve suddenly started talking about reducing the purchase of government securities).
The decision of the Federal Reserve can have an effect
Gupta said, the interest rate by the Federal Reserve and tax growth in the US is a big challenge. He said, I think the Federal Reserve will not raise the interest rate this year but may slow down the bond purchase program by the end of the year. This may cause some impact on the currencies of emerging markets, including India.
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