On the foreign exchange front, the Indian rupee snapped higher on Friday, considerably boosted by hefty fund inflows arising out of India’s bonds being included in the latest JPMorgan emerging market debt index. The rupee, which serves as a national currency in India, closed at 83. 3825 against the US dollar, which was a nearly 0.1% improvement in the INR vs USD rate from the previous session’s close of 83.46 against the USD. Although there were strong intervention bids present from state-run banks and large foreign banks quoting dollars, the gains within the rupee remained limited, observed the traders.
This decision to include bonds will possibly allow billions of dollars to flow into the fifth largest economy in the world starting from Friday after the passionate inclusion of eligible Indian bonds into the much-tracked JPMorgan index wanted. This development comes in the INR vs USD rate, at a time when the Indian rupee has slightly declined, with a drop of 0.2 percent over the year 2024 till this time.
On the same note, most Asian currencies have depreciated between 2% and 7% as expectations for future Fed rate cuts continue to diminish. Earlier in the year, market participants expected the Fed to make up to six cuts of 25 basis each for the year, and now they estimate it to be around two cuts for 2024.
It was an extended volatile trading session on June 28, with benchmark indices ending in the red. The BSE’s Sensex index dropped by 21045 points or 0.27 percent at 79,032.73, and Nifty fell to the level of 33.90 points or 0.14 percent to leave a total of 24,010.60.
The overall depreciation of the Asian currencies and the appreciation of the rupee against the U. S. dollar can be perceived as the expressiveness of India’s growing economic might and a beneficial influence of the more recent addition of the bond market in the JPMorgan index. This proves that India’s financial market is opening and can be perceived as a positive step for attracting foreign investors.
Favourable forex rates will contribute a boost in the inflow of capital that should help the Indian rupee come under a shield when other markets dip.
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