Consistent foreign fund inflows along with a Brexit trade deal will lead further appreciation in Indian Rupee as the currency ends 2020 on a high note.
However, rupee has been a laggard in 2020, as the currency did not appreciate much despite record inflows.
On the other hand, India’s forex reserves continued to rise, indicating, an active Reserve Bank which has kept rupee in a check, to make exports competitive.
The RBI is known to enter the markets via intermediaries to either sell or buy US dollars to keep the rupee in a stable orbit.India’s foreign exchange reserves rose by $2.563 billion during the week ended December 18 to $581.131 billion.
Besides, lesser intervention from the Reserve Bank is expected after it was called out by the US Treasury Department to curtail its market activities.These factors along with a continued supply of foreign funds will lead to an appreciation move in rupee.Indian rupee closed flat for the week close of 73.54 a dollar.”Rupee appreciated is in line with continued foreign equity flows though the pace has slowed down,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.