Week in FX Asia – Indian Rupee Recovers After Slump Boosted by Reforms

This week the Indian Rupee touch a historic low (60.80) as fears that the US Federal Reserve could start its QE tapering program sooner rather than later. Positive fundamental indicators like a narrower deficit and advances in the energy reform from brought the currency out of the low point. The currency finished the trading week at 59.67 after an impressive two day recovery.

The INR received outside help as what seemed to be genuine fears of a short term tapering by the Fed continued to be dismissed as more Fed members have questioned the move. In the short term it will be unlikely, although it is not discounted further down the year. September is the earliest most analyst see a change in US monetary policy, with some observers going further until the end of the year.

The Reserve Bank of India released the narrower deficit numbers early to stop the decline of the Rupee. It had the desired effect as it one of the main factors investors acted upon....