The Indian rupee (INR) goes up with a negative bias at the beginning of Friday, according to FXSTERET data. The euro (EUR) in front of the Indian rupee changes from hands to 96.93, with the Eur/inr torque decreasing from its previous closure by 97.19.
Meanwhile, the sterling pound (GBP) trades 113.70 in front of the INR in the first hours of European negotiation, also losing ground after the GBP/INR pair was established in 113.76 at the previous closure.
Indian economy FAQS
The Indian economy has averaged a growth rate of 6.13% between 2006 and 2023, which makes it one of the fastest growing in the world. The high growth of India has attracted a lot of foreign investment. This includes foreign direct investment (FDI) in physical projects and indirect foreign investment (IIF) of foreign funds in Indian financial markets. The higher the investment level, the greater the demand for rupees (INR). Fluctuations in the demand for dollars by Indian importers also affect INR.
India has to import a lot of its oil and gasoline so that the price of oil can have a direct impact on the rupee. Petroleum is mainly marketed in US dollars (USD) in international markets, so if the price of oil increases, aggregate demand for US dollars increases and Indian importers have to sell more rupees to meet that demand, which depreciates the rupee.
Inflation has a complex effect on rupee. Ultimately, it indicates an increase in the money supply that reduces the general value of the rupee. However, if it exceeds the 4% objective of the Bank of the India Reserve (RBI), the RBI will increase interest rates to reduce it by reducing credit. The highest interest rates, especially real rates (the difference between interest rates and inflation) strengthen rupee. They make India a more profitable place for international investors to deposit their money. A fall in inflation can support rupee. At the same time, lower interest rates can have a depreciative effect on rupee.
India has had a commercial deficit during most of its recent history, indicating that its imports exceed its exports. Since most of the international trade is done in US dollars, there are moments (due to seasonal demand or excess orders) in which the high volume of imports generates a significant demand for US dollars. During these periods, rupee can weaken since a lot is sold to meet the demand for dollars. When markets experience greater volatility, the demand for US dollars can also be shot, with an equally negative effect on rupee.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
