India’s rupee surges to 6-m peak

India’s rupee has surged to a six-month peak, becoming Asia’s top-performing currency this year as foreign investors continue buying local bonds ahead of the country’s inclusion in global debt indexes, Bloomberg reported on Thursday.

Analysts predict further appreciation, with the currency expected to reach 82.50 against the dollar by June-end.

Despite its stability, speculation arises whether India’s central bank, possibly leveraging its substantial foreign-exchange reserves of $619 billion, is curbing currency fluctuations. However, experts believe the Reserve Bank of India’s policy remains consistent in moderating abrupt currency movements.

“The RBI policy overall will not change, they would prevent any sharp moves in the rupee,” Dhiraj Nim, economist and forex strategist at Australia & New Zealand Banking Group in Mumbai told Bloomberg. “If there is an appreciation pressure, they would absorb that money that flows in.” he added.

Foreign inflows totaling $5 billion into rupee-denominated bonds have bolstered the currency by 0.5 per cent this year, aligning with India’s impending inclusion in global debt indices.

The nation’s bonds are under scrutiny for potential inclusion in FTSE Russell’s EM bond gauge, with a review scheduled by month-end.

Driving the rupee’s ascent are factors such as corporate repatriation flows, robust inflows in the debt market, and dollar weakness, according to Anindya Banerjee, a currency analyst at Kotak Securities.