Indian Rupee recognized as the worst Asian currency in 2022
2022.12.30 06:05
Indian Rupee recognized as the worst Asian currency in 2022
Budrigannews.com – As the dollar soared in response to the aggressive monetary policy stance taken by the U.S. Federal Reserve to contain inflation, the Indian rupee ended 2022 as the worst-performing currency in Asia, falling 11.3%—its largest annual decline since 2013.
The rupee completed the year at 82.72 to the U.S. cash, down from 74.33 toward the finish of 2021, while the was set out toward its greatest yearly increase beginning around 2015.
GRAPHIC : In 2022, Asian FX loses the most to the Indian rupee – GRAPHIC: The rupee was also hurt by a rise in oil prices brought on by the Russia-Ukraine conflict, which increased India’s current account deficit to a record high in the September quarter in absolute terms. This was the rupee’s biggest annual loss since 2013.
Market participants anticipate that, as commodity prices fall and foreign investors continue to buy Indian stocks, the rupee will trade with an appreciation bias into 2023.
Raj Deepak Singh, head of derivatives research at ICICI Securities, stated, “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.”
The majority of traders and analysts anticipate that the currency will fluctuate within a narrow range of 81.50 and 83.50 during the first quarter.
Analysts predicted that equity inflows would also be an important metric for foreign investors to keep an eye on for the rupee.
However, they added, it had become difficult to gauge the direction of share markets in light of several uncertainties heading into 2023, such as tight monetary policy conditions, a likely recession in some economies, and an ongoing geopolitical conflict.
More Dollar strengthening due to new wave of COVID in China
Christopher Wong, an FX strategist at OCBC Bank, stated, “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.”
According to Wong, the South Korean won and the Thai baht will gain the most next year, so even if the rupee appreciates, it could still underperform Asian peers and not be a top pick in the emerging market complex.
