Is Indian Rupee seems to be the weakest currency?

As per one analysis, the Indian rupee is set to end the year as Asia's worst-performing emerging market currency. The second time in a row, Indian Rupee has been found to be the worst-performing currency in Asia. The rupee is falling dramatically against the US dollar in recent months. Rupee hits one week high and is recorded with 75.59 to the dollar. As per the Bloomberg, Indian rupee might fall further to 76.5 by the end of March 2022. The Indian rupee has fallen beyond 76 in March 2020 when Covid-19 destruct the global economy. The Indian Rupee falls to a seventeen-month low against the US Dollar.

But this time what are the reasons for the downfall. In this quarter, the currency has declined by almost 2.2%. One prime reason observed is that global investors pulled out more than four billion dollars. As per the reports, the Reserve Bank of India (RBI) sold some of its dollar reserves to restrict the rupee downfall. Indian central bank was helpless to take solid measures because India’s trade gap widened to a record high of $22.9 billion on account of rising in imports. Currently, Interest rates are at a historic low, and key lending rates have changed more than a year in May 2020. RBI had kept interest rates unchanged in every of its review.

India’s central bank raises concerns about stable coins effects on the Indian rupee. Depreciation of Indian currency could pressurized RBI to cut rates in its next review meeting. However, concerns over the Covid-19 new variant, Omicron will keep the Indian rupee’s strength in check. Oil prices are expected to be below $80 per barrel in near future because of Omicron's emergence. There is a positive note that fresh IPO inflows and low oil prices might have a chance to strengthen the Indian currency.