Rupee on slippery slope for a year at least | The Daily Star
12:00 AM, December 06, 2019 / LAST MODIFIED: 12:00 AM, December 06, 2019

Rupee on slippery slope for a year at least

The Indian rupee will not recover lost ground in the coming year, according to a Reuters poll of currency strategists who are more pessimistic than last month amid doubts over any kind of trade truce between the United States and China.

Most emerging markets currencies have depreciated against the U.S. dollar, hurt by the tit-for-tat trade war between the world’s two largest economies, and there are scant signs of a resolution anytime soon.

Also weighing on the currency’s outlook, the Reserve Bank of India has cut its key interest rate by 135 basis points so far this year to support a slowing economy. It is expected to cut the repo rate by another 25 basis points to 4.90% on Thursday.

“Global trade talks are turning topsy-turvy, a lot will depend on how that plays out. Domestically, the tide has turned rough for the INR, led by tapering of domestic growth optimism and fiscal worries - all weighing on the rupee’s way forward,” Madhavi Arora, lead economist, FX and rates at Edelweiss Securities said.

“After December’s rate cut ... reforms in the banking sector and strong infrastructure investments are needed in addition with monetary stimulus to help growth and the rupee.”

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