Indian Rupee Becomes Asia’s Top Performing Currency In May Amid Covid Second Wave

indian rupee top performing currency
by Sanjana Shenoy
by Sanjana Shenoy 1173

We all know about the dip in India’s economy after the second wave of the coronavirus struck a fatal blow to the country. With lakhs of new cases and thousands dying every day, our image and our currency value also suffered a setback. But all grey clouds have a silver lining. Pushed to a corner, our brave healthcare workers worked hard, and the results are in front of us. Monetarily, the rupee makes a comeback as Asia’s top-performing currency. Let us share this good news with you all in detail.

Indian Rupee Climbed 1.5 Percent Against The Dollar In May

Bloomberg reported that India’s currency has climbed 1.5% against the dollar in May to become Asia’s top-performing currency. Currently, the rupee also has the benefit of offering Asia’s highest carry returns. Previously in April, the rupee had fallen due to the rising covid situation across the land. Experts take this positive news as a sign of improving the Covid-19 situation in India. This rise of the rupee is a direct result of how different states’ lockdown has decreased the daily rise in cases. However, the Central bank must be careful as a stronger currency has an adverse impact on exports at a time when the economy is emerging from a recession.

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indian rupee top performing currency

Indian Rupee Becomes Asia’s Top Performing Currency

Anindya Banerjee, currency strategist at Kotak Securities Ltd mentioned that “High carry and low volatility are making the rupee stand out”. He also added that the Reserve Bank of India may step in at some stage to limit the currency’s gains. The rupee tumbled to the lowest in nine months in April as coronavirus cases rose above 300,000. This triggered the unwinding of $50 billion in carrying trades. The currency may also get a lift as investors convert dollars from a slew of upcoming initial public offerings into rupees. Online food delivery startup Zomato Ltd.’s $1.1 billion share offering is among the upcoming IPOs.

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indian rupee top performing currency

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According to Barclays Plc. expects, the rupee is expected to climb to 72.50 per dollar by next quarter from around 73 now due to the supportive flows, attractive valuations, and a less interventionist RBI. Besides a more favourable trajectory of reported cases, the rupee has also drawn in speculative funds by offering the highest carry trade returns in the region.

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