Indian rupee ends 2022 as worst-performing Asian currency against the US dollar

Indian rupee ends 2022 as worst-performing Asian currency

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The Indian rupee ended 2022 as the worst-performing Asian currency, with a fall of 11.3%, its most significant annual decline since 2013. The US dollar rocketed on the U.S. Federal Reserve’s assertive monetary policy stance to tame inflation.

The rupee ended the year at 82.72 to the U.S. currency, down from 74.33 at the end of 2021, while the dollar index was headed for its biggest yearly gain since 2015.

The rupee was also a victim of a rally in oil prices flared by the Russia-Ukraine conflict, which caused India’s current account deficit to a record high in the September quarter in absolute terms.

“The Fed could keep rates higher for longer than anticipated, and if the slowdown in developed economies turns into a prolonged recession, India’s exports could be hit severely, which are two key risks for the rupee,” said Raj Deepak Singh, head of derivatives research at ICICI Securities.

Most traders and analysts expect the currency to move between a tight 81.50-83.50 range in the first quarter.

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Analysts said that equity inflows would be a key metric to watch for the rupee for foreign investors as well.

But considering several uncertainties heading into 2023, such as tight monetary policy conditions, likely recession in some economies, and an ongoing geopolitical conflict, they added that gauging the direction of share markets had become burdensome.

“There’s going to be a period of softness in global equities… If we get a selloff in Indian shares, I’ll be less optimistic on the rupee,” said Christopher Wong, FX strategist at OCBC Bank.

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Benjamin is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for web-based technologies and gadgets and focus on writing about Web Trends, Smartphones, and Tablets.