Co-founder of the online brokerage and trading platform Zerodha Nikhil Kamath has said that the Indian Rupee hovering around the 82-mark is not such a bad thing afterall. Kamath also shared a graph to illustrate his point. This graph showed a comparison between the US Dollar and other currencies.
Kamath tweeted, “Rupee at 82 isn’t such a bad thing…. US is too far anyway, for all else but dollar-dominated commodities… If this trend continues, large companies might have to relocate out of the US to remain competitive.”
Rupee went below the 82-mark on Wednesday for the first time in intraday trade before settling at 81.93 against the dollar. Kamath is not the only one to say that the rupee has fared better in comparison to USD and other currencies. Former Chief Economic Advisor KV Subramanian also had noted that while there are multiple factors leading to the appreciation of the US dollar, the Indian currency has not fared that badly as compared to others. Subramanian said the US dollar has appreciated so much due to rising dollar yields, flight to safety and above all home bias.
He further said in his Twitter thread, “How should we see Rupee performance vis-a-vis other currencies? Rupee depreciation is less than all other currencies because of our stronger macro-fundamentals. This is also evidenced in significant FPI inflows since July with August inflow being highest in 20 months.”
The former CEA noted that he does not expect the US dollar to ease anytime soon. He furthermore asserted, “While the US economy is not doing well, asset markets will do well in the US. In fact, there may be a bubble building up in US asset markets.”
“Once the Russia-Ukraine war uncertainty subsides, I expect the extraordinary amounts of money flowing into the US to stop. That’s when I think dollar appreciation will stabilise. Till then, all other currencies will depreciate, with rupee depreciating less than other currencies.”
Rupee vs dollar today
Rupee appreciated 35 paise to 81.58 against the US dollar in early trade today as the American currency eased slightly. Rupee opened at 81.60 against the dollar, touched 81.58. The rupee also touched 81.75 against the American currency. Senior Reseach Analyst at Reliance Securities Sriram Iyer told news agency PTI, “Investors now await the RBI’s monetary policy committee’s decision on Friday, with growing expectations of a 50-basis points hike due to the pressure on the rupee from hefty interest rate hikes in the US.”
Also read: Rupee hits new low at 81.9 as US dollar rallies to record high
Also read: Why is the US dollar rising and rupee declining? Ex-CEA K Subramanian explains